Terms
- Accelerated drawback
- Payment of a drawback refund before final liquidation of the underlying claim, conditioned on the claimant posting an Activity Code 1A bond.
- Activity code
- A one- or two-character classification used by CBP on Form 301 to identify the customs activity a bond covers. Each corresponds to a bond-conditions section in 19 CFR Part 113, Subpart G.
- Bond conditions
- The substantive obligations a bond secures, set out in 19 CFR Part 113, Subpart G, and incorporated by reference into the bond instrument.
- CBP
- U.S. Customs and Border Protection, the obligee on customs bonds and the bureau within the Department of Homeland Security that administers U.S. customs law.
- Centralized examination station (CES)
- A privately operated facility where CBP examines imported merchandise. CES operators post Activity Code 2 custodial bonds.
- Continuous bond
- A customs bond covering all qualifying transactions through every port of entry for a continuous period, rated on an annual premium, in force until terminated. The default form for recurring activity.
- Customs broker
- A person licensed under 19 U.S.C. § 1641 to transact customs business on behalf of importers. Brokers may post their own Activity Code 1 bonds and may execute principals' bonds as attorneys-in-fact.
- Drawback
- A refund of duties, taxes and fees paid on imported merchandise that is subsequently exported or destroyed under CBP supervision.
- Duty
- The tariff levied on imported merchandise under the Harmonized Tariff Schedule of the United States (HTSUS).
- Foreign trade zone (FTZ)
- An area within the United States treated, for duty purposes, as outside U.S. customs territory. Operated under an Activity Code 4 bond.
- Form 301
- CBP's standard customs bond form, used for all activity codes CBP currently accepts on the standard form. Activity Codes 12 and 17 require separate instruments.
- General indemnity agreement
- The contract the principal and its indemnitors sign with the surety at bond inception, under which they agree to reimburse the surety for any loss it pays under the bond.
- Importer of record (IOR)
- The party legally responsible to CBP for the entry of imported merchandise and payment of duties, taxes and fees. The principal on an Activity Code 1 bond.
- Importer Security Filing (ISF / 10+2)
- Advance cargo data CBP requires on ocean-borne imports, generally twenty-four hours before lading at the foreign port. Bonded under Activity Code 1 or Activity Code 16.
- In-bond movement
- Movement of merchandise from one U.S. port to another, or to a destination outside the United States, under CBP custody and without payment of duty at the port of arrival. Secured by an Activity Code 2 bond.
- Insufficiency notice
- A written CBP determination that an existing continuous bond is no longer adequate to protect the revenue, with a cure window in which the principal must file a larger replacement bond.
- Instruments of international traffic (IIT)
- Containers, lift vans, cargo vans, shipping tanks, pallets and similar reusable equipment. Bonded under Activity Code 3A.
- IPR sample
- A sample of detained or seized merchandise CBP delivers to a rights owner in connection with a possible infringement determination. Bonded under Activity Code 15.
- ITC exclusion order
- An order of the U.S. International Trade Commission under Section 337 of the Tariff Act of 1930 excluding infringing merchandise from entry. Bonded under Activity Code 12 during any permitted entry-under-bond period.
- Liquidated damages
- A pre-set monetary amount CBP assesses for breach of a regulatory obligation, payable up to the penal sum of the bond. The most common form of customs bond claim.
- Liquidation
- CBP's final computation of the duties, taxes and fees owed on an entry, generally within one year of entry subject to statutory extensions.
- Marine terminal operator (MTO)
- An operator of a marine terminal handling international cargo. Bonded under Activity Code 17.
- NVOCC
- Non-vessel-operating common carrier. Subject to international carrier and advance-manifest obligations bonded under Activity Code 3.
- Obligee
- The party a bond protects. On customs bonds, CBP on behalf of the United States; on ITC exclusion bonds, the complainant.
- Partner Government Agency (PGA)
- A federal agency other than CBP whose requirements attach to imported merchandise: FDA, EPA, USDA, DOT, FCC, ATF, CPSC and others. PGA status triples single transaction bond sizing.
- Penal sum
- The maximum amount for which the surety is liable on the bond, stated on its face.
- Port director
- The CBP officer in charge of a port of entry, with delegated authority over bond filings for certain activity codes.
- Principal
- The party whose performance the bond guarantees: importer, broker, carrier, warehouse, FTZ operator, gauger, terminal operator, rights owner or other regulated entity.
- Rider
- An endorsement executed by the surety and principal and filed with CBP that modifies a discrete term of an existing bond — name, address, trade-name alias, co-principal or port code — without replacing the instrument. A penal-sum increase requires a new bond, not a rider.
- Single transaction bond (STB)
- A customs bond covering exactly one customs transaction, expiring when the transaction is liquidated and all obligations are satisfied.
- Surety
- The Treasury-listed insurer that financially guarantees the principal's obligations to CBP, identified on the bond by its three-digit surety code.
- Three-digit surety code
- The identifier CBP and the Fiscal Service assign to each Treasury-listed surety company.
- Treasury Circular 570
- The Department of the Treasury's annually republished listing of companies certified to write federal surety bonds. A surety must appear on it to write a customs bond.
Frequently asked questions
What is the difference between a rider and a replacement bond?
A rider changes a discrete term such as the principal's name or address. Any increase in the penal sum requires a new replacement bond.
What is a penal sum?
The maximum amount the surety can be required to pay under the bond.
What are liquidated damages?
Pre-set amounts CBP assesses for regulatory breaches; the most common customs bond claim.
