Anyone wishing to import goods into the United States or engage in import related operations is required to post a surety bond or cash equal to that bond amount with U.S. Customs. This posting protects the Customs revenue and ensures compliance with the regulations of the United States pertaining to importing and related activities. Cash may be posted in the form of U.S. currency, U.S. Treasury notes or Treasury bonds and will be held by Customs until Customs determines the security is no longer required. This could be for several years. In most cases, the best alternative is the posting of a U.S. Customs Bond Form 301. The 301 Bond Form is a multi-purpose document used for a range of activities from importing or operating a bonded warehouse to serving as a bonded truckmen or operating an international shipping fleet or airline. The 301 Bond Form can be used to cover importing activities on a single transaction or continuous basis. When the bond is completed for single transactions, it covers only one transaction. When the bond is executed as a continuous bond, it will normally cover all transactions by the principal while the bond is valid.
While the 301 Bond Form can cover up to ten specific, import-related activities, the needs of most principals typically fall into the first three activities which are covered in this overview. It is important that the bond be completed using the correct activity code to insure the proper coverage for the principal, so a brief description of these activity codes is provided for convenience. Please note that all Customs administration is subject to the discretion of each Port Director.
Generally, Activity 1 is used by and importer of merchandise to guarantee to the government that duty is paid in the proper amount, and that the goods imported are in compliance with the laws of the United States.
Single Transaction - Bond is usually completed for either an amount equal to the value of the merchandise plus the duty and other fees and taxes or, for certain merchandise as determined by U.S. Customs, an amount equal to three (3) times the value of the merchandise.
Continuous - Bond amount is usually equal to 10% of the duty and other import taxes paid in the previous year, in multiples of $10,000 if the duties are less than $1,000,000 or multiples of $100,000 if the duties are over $1,000,000. Currently, the minimum bond amount required by U.S. Customs is $50,000. Further, care should be taken to insure that the bond is sufficient to cover the duty, not the value, on any single shipment of merchandise.
Drawback is a procedure under which and exporter can obtain refunds on duties previously paid on imported goods which have been exported. An exporter may claim drawback under either exporter's summary or accelerated payment.
Single Transaction - Bond is issued for an amount equal to accelerated drawback duty being claimed for the covered entry.
Continuous - Bond is completed for an amount equal to the total drawback duty to be claimed in one year.
Activity 2 is used to cover operations which carry or hold merchandise not yet entered into the commerce of the United States, for export or entry at a later time or place; also known as "Bonded Merchandise." Operations such as bonded warehouses, cartmen, carriers, container stations are covered under this activity. Also, importers carrying their own bonded merchandise would be required to obtain this coverage.
Continuous - Amount of the bond is determined by Customs based on a completed application and is dependent on the size and type of operation. During the application approval process, Customs will advise the principal of the correct bond amount.
Activity 3 is for operations of ships, airlines, and other conveyors of international merchandise. The bond ensures that operators properly manifest the goods they are carrying, pay for overtime services, and comply with other Customs regulations related to the clearance of the vessel.
Single Transaction - Amount is determined by Customs at the time of clearance, but is generally not less than $25,000.
Continuous - Bond amount is determined by Customs, but is generally not less than $25,000.
Activity 3a is used to cover the movements and clearances of containers which move internationally. Without this provision each container moved into the United States would have to be entered and duty paid upon entry.
Continuous - Bond is usually issued for $20,000.
The most commonly issued Customs bonds are for Activity 1, i.e. for importing. An importer must decide whether to use single transaction bonds or a continuous bond. Most companies use the facilities of a Customshouse broker to handle the paperwork required by U.S. Customs when merchandise is imported. Depending on the value of imports and type of commodity, the cost of using single transaction bonds can substantially exceed the cost of a continuous bond. The purchase of a continuous bond may be more cost effective after only one or two shipments rather than purchasing single transaction bonds for each shipment.