Customs Bonds - Sufficiency and ADCVD
In 2019, CBP issued over 4,000 bond sufficiency letters. This was due to the dramatic increase in tariffs caused by the section 201, 232, 301 tariffs, and other types of ADCVD, and safeguard issues.
Challenging a Bond Sufficiency Issue
Importers who wish to challenge Customs bond sufficiency requirements should contact Customs attorney experienced with these issues.
Sufficiency for Continuous Bonds.
CBP policy is to require importers to maintain bond coverage that includes projected future duties, taxes and fees. This is evaluated under CBP’s continuous bond formula. CBP issued the following CSMS message to educate the trade on these issues: CSMS# 18-000664 - Continuous Bond Sufficiency Review and Bond Stacking Liability
Due to the increase in tariffs, many importers are experiencing a large increase in their continuous bond amount and may have difficulty meeting the requirements. Currently, there are only 137 continuous bonds over $10 million and CBP will continue to evaluate this.
Sufficiency for Single Transaction Bonds (STBs)
Like Continuous bonds, the STBs are now centralized and monitored by CBP’s National Finance Center (NFC) under the eBond program. Customs brokers may change the STB bond amount filed at cargo release to ensure it is the correct amount when the entry summary is filed (as entry type 03). Customs brokers select “C” to change the bond amount. If the STB is not sufficient, however, CBP issues a notice to increase the STB amount.
CBP has revised its model for setting ADCVD bonds, and will continue to work with sureties to conduct the table top exercise (called Supplemental AD/CVD Bond Formula). CBP is also looking to evaluate the new formula against accounts importing under multiple AD/CVD cases (given the magnification of risk).
The Guidelines for determining the amount of a bond are set forth in 19 C.F.R. §113.13(b), which sates in part, as follows:
In determining whether the amount of a bond is sufficient, CBP will consider:
(1) The prior record of the principal in timely payment of duties, taxes, and charges with respect to the transaction(s) involving such payments;
(2) The prior record of the principal in complying with CBP demands for redelivery, the obligation to hold unexamined merchandise intact, and other requirements relating to enforcement and administration of customs and other laws and CBP regulations;
(3) The value and nature of the merchandise involved in the transaction(s) to be secured;
(4) The degree and type of supervision that CBP will exercise over the transaction(s);
(5) The prior record of the principal in honoring bond commitments, including the payment of liquidated damages; and
(6) Any additional information contained in any application for a bond.
Curated News Related to Bond Sufficiency:
February 7, 2019: CBP in review of bond formula issues.
December 7, 2018: CIT: TABACOS USA, INC., Slip Op. 18-170: Where the court granted a temporary restraining order and then overturned CBP’s bond sufficiency requirements per 19 C.F.R. §113.13(b) and 5 U.S. Code § 706.
March, 2017: POTUS: Executive Order 13785: Establishing Enhanced Collection and Enforcement of AD/CVD and Violations of Trade and Customs Laws.
August 2016: GAO Report on AD/CVD: CBP Action Needed to Reduce Duty Processing Errors and Mitigate Nonpayment Risk.