US Customs reviews entries in a multi-step process. The freight is released to the importer before this process is complete. Customs therefore requires that commercial entries be covered by a bond, which acts like an insurance policy. It acts as a guarantee that an importer will (after the freight is released):
- Agree to pay duties in a timely manner (within 10 days if processed through a broker)
- Agree to make or complete a proper entry
- Agree to produce documents and evidence when requested
- Agree to redeliver the merchandise to Customs’ custody, if necessary
- Agree to rectify any noncompliance with the provisions of admission
- Agree to the examination of the merchandise
- Agree to use the freight in the manner dictated by a special-use provision entry
- Agree to comply with Customs regulations, electronic entry requirements and/or advance cargo information filing requirements
- Agree to the consequences (damages charged against the bond) in the case of default
As mentioned above, EVERY commercial entry is required to be covered by a bond. PWS can cut a Single-Entry bond for each shipment.
- For restricted merchandise (anything requiring a declaration to the FCC, FDA or other government agency), the bond must cover three times the commercial invoice value.
For non-restricted merchandise, the bond must cover the commercial invoice value plus the duties and taxes applicable to the shipment.
A Single-Entry bond needs to be filed in hard copy format to Customs at the port in order to obtain a release. The documents are sent by courier to Customs, reviewed by an Inspector, released, and then returned to the broker’s office by courier. All this traveling of the paperwork takes time.
As an alternative from a Single-Entry Bond, you may apply with PWS for a continuous bond which may save a regular importer a substantial amount of money and time.
- The amount of a continuous bond must cover 10% of all the DUTIES PAID (not the invoice value) annually by an importer.
- The minimum continuous bond is $50,000 – as this covers up to $500,000 in duty paid per year.
- MOST importers are covered by the minimum continuous bond.
- Generally, entries with Continuous Bonds are electronically processed and reviewed, resulting in an electronic notification to the customs broker that the shipment is released or needs fruther review.
Usually for a new importer, the first three or four shipments are reviewed, and then they start to release paperless. When entries release paperless, the processing time is cut from days to an hour or so.
TEMPORARY IMPORT BONDS
Shipments entering the United States on a temporary basis can import duty free into the US for a period of time.
- The bonds typically apply to goods that are not of US origin and are not shipped under a Carnet.
- The goods often come in for repair or modification, demos, etc.
- Upon completion the goods are re-exported and the bond is closed.
- The bond value is 10% of the commercial value.
IMPORTER SECURITY FILING (ISF or 10+2)
Importers that do not carry a continuous bond are also required to obtain a single-transaction bond for an ISF filing that is separate from the single-transaction bond for the Customs entry. The single-transaction bond for ISF is not based on the value of the shipment, which may be unknown at the time of ISF filing. Importers that carry a continuous bond can use that same bond to cover ISF transactions.