In the world of international shipping, understanding the terminology is crucial for smooth operations. One such term that plays a significant role is ‘Continuous Bond’. This article delves into the depths of this term, its implications in ISF Filing, and the definitions of related concepts. A comprehensive understanding of these terms is essential for anyone involved in the shipping industry.
The term ‘Continuous Bond’ refers to a type of customs bond, which is a contract used for guaranteeing that a specific obligation will be fulfilled. The bond is issued by an insurance company or a surety company to cover a whole year’s worth of shipments. It’s ‘continuous’ in nature because it automatically renews every year unless the surety or principal decides to terminate it.
Understanding Continuous Bond
The Continuous Bond, also known as an Annual Bond, is a type of customs bond that covers all entries made by an importer nationwide for one year. It is a financial guarantee between the surety company issuing the bond, the Principal (who is required to file the bond), and Customs & Border Protection (CBP). The bond ensures that all duties, taxes, and charges owed to the federal government will be paid.
Continuous Bonds are required by the CBP for all importers importing goods for commercial purposes and valued over $2,500. The bond amount is usually 10% of the duties, taxes, and fees paid by the importer during the previous year. However, the minimum bond amount is $50,000.
Benefits of Continuous Bond
Having a Continuous Bond offers several benefits to importers. Firstly, it eliminates the need to obtain a single entry bond for each shipment, thereby reducing paperwork and administrative costs. Secondly, it covers multiple entries at all U.S. ports of entry, providing flexibility to the importer. Lastly, it expedites the customs clearance process as the bond is filed electronically and can be verified by CBP immediately.
Moreover, a Continuous Bond remains effective until it is terminated by the surety or the principal. This means that as long as the bond is active, the importer can continue to import goods under the protection of the bond, ensuring compliance with all customs regulations.
Termination of Continuous Bond
A Continuous Bond can be terminated by either the surety or the principal. The termination process involves notifying CBP in writing. The termination becomes effective 15 days after CBP receives the notice. However, the surety remains liable for any customs duties, taxes, and penalties incurred while the bond was in effect.
It’s important to note that if an importer’s Continuous Bond is terminated, they must immediately obtain a new bond to continue importing goods into the U.S. Failure to do so can result in delays in cargo release and potential penalties from CBP.