Drawback is the refund of duties, taxes and fees paid on imported merchandise that is later exported or destroyed under CBP supervision. A claimant who wants that refund on an accelerated basis — before CBP has finally liquidated the underlying drawback claim — must post an Activity Code 1A bond. The bond guarantees that any portion of the accelerated payment later found to have been overpaid will be returned to CBP.
The conditions are set out at 19 CFR § 113.65 (repayment of erroneous drawback payment bond conditions). Drawback itself is governed by 19 CFR Part 190.
Who must post it
- Manufacturers, exporters and importers filing drawback claims under accelerated payment procedures.
- Claimants using the exporter's summary procedure.
- Drawback brokers and filers acting for claimants, where the claimant is the principal on the bond.
What the bond guarantees
- Repayment to CBP of any accelerated drawback that liquidation shows was not owed, together with interest where assessed.
- Compliance with drawback recordkeeping and document-production requirements during the claim's liquidation cycle.
How CBP sizes it
- Continuous: $50,000 minimum, sized to the accelerated drawback the claimant expects to receive over the bond period.
- Single transaction: keyed to the specific claim, with a nominal $100 minimum.
- Because the bond covers projected refunds rather than historical duties, sizing should be forward-looking.
Practitioner notes
- The refund cycle that followed Learning Resources, Inc. v. Trump has increased drawback activity for many importers. Size the bond against the coming twelve months, not the last twelve.
- Drawback claims liquidate on their own timetable; liability on the bond survives until each covered claim is liquidated.
- A claimant that already holds a continuous Activity Code 1 importer bond still needs a separate Activity Code 1A bond to receive accelerated payment.
Frequently asked questions
Can I receive drawback without an Activity Code 1A bond?
Yes, but only after CBP liquidates the claim, which can take a year or more. The bond is what allows accelerated payment.
What happens if CBP later reduces my drawback claim?
You repay the difference. If you do not, CBP demands it from the surety under the bond, and the surety recovers from you under the indemnity agreement.
Is the drawback bond continuous?
It can be. Frequent claimants use a continuous bond; one-off claimants can post a single transaction bond keyed to the claim.
Primary sources
