Chapter 10. Ensuring Compliance with Basic Customs Requirements: Customs Bonds and Liquidated Damages

AuthorSarah Nappi
Pages191-199
CHAPTER 10
Ensuring Compliance with Basic
Customs Requirements: Customs
Bonds and Liquidated Damages
SARAH NAPPI
INTRODUCTION TO CUSTOMS BONDS H
AND LIQUIDATED DAMAGES
A customs bond is a contract designed to “protect the revenue,” a phrase often
used by U.S. Customs and Border Protection (CBP), and to ensure compliance
with the laws and regulations enforced by that agency. From your perspective—
that of a person engaged in a customs transaction—having a customs bond may
be an essential requirement in dealing with CBP. There are three parties to a
customs bond: () the principal (frequently the importer or a customs broker),
who gives the bond to CBP to assure the performance of its customs obligations;
(2) the surety, who agrees to guarantee payment of any liability arising from the
principal’s failure to comply with those obligations; and (3) the beneficiary, CBP.
Bonds are generally required for the commercial importation of goods into the
United States, for the transportation or storage of such goods before they are
entered for consumption, and for other specific import-related activities.
The breach of a bond condition, such as failing to timely submit an entry
summary or failing to make goods available to CBP for examination, subjects
both the principal and the surety to liability for liquidated damages under the
bond. This liability may be enforced through civil litigation by the U.S. Depart-
ment of Justice, if necessary, but also may be mitigated or canceled through the
CBP administrative petition process.
POSTING SECURITY FOR CUSTOMS TRANSACTIONS H
As an importer, you must post a bond with CBP as security to cover the duties,
fees, and taxes that accrue in connection with your import transactions, and as
an assurance that you will fulfill certain nonmonetary obligations arising from
your import activity. Similarly, other parties that accept responsibility for the
handling of goods, such as carriers, warehouse proprietors, foreign trade zone
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Ms. Nappi would like to thank Jaimie Feltault and John Cooper for their assistance in the preparation of this chapter.
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