The Court of International Trade has overturned a U.S. Customs and Border Protection demand for a significant increase in the amount of an importer’s continuous entry bond.
CBP informed the importer that its $300,000 CEB was “insufficient to protect the revenue and insure [sic] compliance with Customs and Border Protection laws and regulations.” CBP then demanded that the bond be terminated within 30 days and replaced with a new bond with a limit of liability of at least $400,000.
However, the importer asserted that the only reason its bond was triggered as insufficient was the late delivery of a single container that was delayed through no fault of the importer. The importer thus argued that its current bond is sufficient and will continue to be for the foreseeable future, citing factors such as its “impeccable” record of paying its duties, taxes, and other charges in full and on time; its “unblemished” record of honoring bond commitments; its full compliance with any CBP demands during its nearly 15 years of existence; and the fact that it imports an inexpensive product held in a bonded warehouse from which withdrawals are periodically made. The importer also pointed out that its sureties have required it to fully collateralize its bonds and that it does not have and cannot raise the amount of cash needed to collateralize a larger bond, meaning that a larger bond requirement would result in the loss of U.S. jobs as well as millions of dollars in annual revenue to the federal government.
The CIT stated that CBP’s own regulations on determining the amount of a bond require the agency to consider factors such as the principal’s record of timely duty payments, compliance with customs laws and regulations, and honoring bond commitments and that that the evidence presented in this case “proves beyond any doubt” that continuing the importer’s existing bond would not endanger the revenue of the U.S. As a result, the CIT concluded that CBP’s demand for an increased bond was “an abuse of discretion” and vacated that demand.