Customs has the right to make claim against a U.S. Customs bond when the bond principal does not perform or pay in accordance with the bond conditions. The bond conditions are set forth in the U.S. Customs Regulations. Most claims issued by U.S. Customs originate from two sources, bills for supplemental duty assessed upon the liquidation of an import consumption entry OR liquidated damages assessed due to the principal's failure to perform a required obligation.
When a claim or demand for payment is issued by U.S. Customs, the bond principal is required to respond in a timely manner to avoid payment under the bond. The principal may respond by issuing payment directly to U.S. Customs or if the claim is in dispute, filing a protest in the case of a supplemental duty bill or filing a petition in the case of a liquidated damage. Current regulations and guidelines call for a bill to be paid or protested within (90) days from liquidation of the entry. Liquidated damage claims must be paid or petitioned within (60) days of the Notice of Liquidated Damage and Demand for Payment issued on Customs Form 5955A.
It is important for a bond principals to exercise care and to promptly respond to bond claims. U.S. Customs will decline any protest filed pursuant to USC 1514 which is lodged more than (90) days after the date of liquidation. As for liquidated damage claims, U.S. Customs may take into consideration any factors which potentially mitigate the claim during the (60) day petitioning period. However, failure to timely file a petition could result in lost or diminished mitigation. Failure to satisfy any claim in a timely manner will result in a demand against the bond and other enforcement actions by U.S. Customs which may include additional monetary assessments, interest and potential sanctioning. If a demand is made against the surety and the bond, the principal must demonstrate to the surety the claim has been paid, protested or petitioned. If the principal does not furnish this information when requested by the surety, the surety will be required to pay. Once the surety pays a claim on behalf of a bond principal, the surety will seek immediate reimbursement of the amounts paid under the bond as well as any other costs incurred from the principal.
The best way to avoid and manage claims is to assign an individual in your company or place of business to be responsible for reviewing, monitoring and responding to all notices, claims, demands and other correspondence issued by U.S. Customs or the surety. C.A. Shea & Company, Inc. is available to assist brokers and agents in obtaining the proper U.S. Customs bond coverage and assisting with most claim matters.