FAQs
Frequently Asked Questions
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What is a Customs Bond? A Customs Surety Bond is a contract used for guaranteeing that a specific obligation will be fulfilled between Customs and an importer for any given import transaction. In other words, A customs bond is an insurance policy that guarantee the United States government will be paid for the import duties and taxes. The most common bond is Activity Code 1 and there are two types of Activity Code 1 Bonds: Single Transaction Bond – This bond can be used for one specific transaction in one particular import shipment. The bond amount is determined by the value of the goods plus the duty and fees owed This bond type can only secure the Importer Security Filing (ISF) if filed as a unified filing and an importer must also purchase a separate ISF bond when required. If the merchandise is subject to governmental agencies( FDA, EPA, APHIS, DOT, etc) then bond amounts are usually three times the merchandise’s value. Continuous Bond – In many situations, this bond is more advantageous for an importer. This bond covers all entries nationwide for a 12 months period. The bond amount is determined by taking 10% of estimated annual duties and the minimum bond amount is $50,000. The Continuous Bond automatically covers the ISF. The importer won’t have to purchase a separate bond for the Importer Security Filing (ISF). The benefits of getting a continuous bond includes ower cost, lower processing time, reduce the possibility of Customs review. The easiest way to get a bond is often through the Customs brokers, who work with surety agencies on behalf of the importers. This is beneficial to the importer because a Customs broker has the expertise and relationships related to Customs activity, and can better assist in proactively monitoring the bond and also with resolution of any issues or claims that may arise.
What is Duty Refund? In certain scenarios, the importer may request for refund of duties paid to Customs and Border Protection(CBP). There are several types of duty refund. Post Summary Correction (PSC) WIthin the 314 day after the duty has been paid to CBP before the ACE entry is liquidated, the trade participants will be able to submit a PSC to amend the existing ACE entry. The PSC may result in being required to tender the additional duty to CBP or eligible for duty refund. Drawback According to U.S. Customs, Drawback is the refund of certain duties, internal revenue taxes and certain fees collected upon the importation of goods and refunded up to 99% of duties paid when the merchandise is exported or destroyed. Protest Generally, If the importer disagrees with a decision made by the U.S. Customs and Border Protection(CBP) or wants to correct information previously entered on entry documents at the time of entry summary liquidation. Within 180 days of liquidation, the importer, their broker, or attorney can contest CBP decisions relating to imported merchandise with a protest If the PSC has been submitted and CBP disagrees with the PSC submission reason and liquidates the entry. The importer may submit a protest to counter CBP’s decisions.
What is Customs Clearance? All goods shipped internationally must pass through customs before they are allowed to enter or exit a country. This includes anything sent by sea, air, or land. When bringing commercial goods into the United States, the shipment must obtain the Cargo Release from Customs in order to pick up the cargo from the port.The broker’s job is to prepare the required import documents and submit them to the Customs and Border Protection (CBP) office. During this process, the broker represents the company who owns the imported goods and provides advice, pays duties on the shipment, and makes sure the goods are released from customs. If the cargo is subject to Customs duty and fees, the importer is responsible for Customs duty and fees payment to CBP within 10 days from the cargo release date. It is strongly recommended to find a reliable experienced custom broker to handle the Customs clearance as a lot of the merchandise may be regulated by other government agencies (FDA, EPA, FWS, etc…). In some cases the clearance process may become very complex and an experienced customs broker can reduce the impact of the complexity or delay due to Customs exam hold.
What is Importer Security Filing (ISF)? The ISF (commonly known as the “10+2”) is a Customs and Border Protection (CBP) regulation that requires importers and vessel operating carriers to provide additional advance trade data to CBP that went into effect on January 26, 2009. The ISF is require to be filed 24 hours prior to the mother vessel leave the origin port. CBP may issue liquidated damages of $5,000 per violation for the submission of an inaccurate, incomplete or untimely filing. Who is Responsible for the Filing? The ISF Importer is required to submit the Importer Security Filing. The ISF Importer is the party causing the goods to arrive within the limits of a port in the United States by vessel. Typically, the ISF Importer is the goods’ owner, purchaser, consignee, or agent such as a licensed customs broker.
