A Customs Drawback Bond guarantees full repayment to U.S. Customs and Border Protection of an overpaid drawback as determined by the liquidation of the drawback claim.
What is a Drawback Bond?
When merchandise is imported into the United States and later exported, a principal may be entitled to a refund of most duties, taxes, and fees referred to as a drawback claim. A Drawback Bond guarantees full repayment to U.S. Customs and Border Protection (CBP) of an overpaid drawback as determined by the liquidation of the claim.
A Customs Drawback Bond may be written as either a single transaction or a continuous bond.
- A single transaction bond can only be used for one Customs transaction.
- A continuous bond is a self-renewing bond that covers all Customs transactions through any port of entry.
This type of Customs bond allows an importer to obtain a refund of 99% of the duties paid on imported goods upon providing proof that someone exported these goods back out of the United States.
How to Calculate a Drawback Bond Amount
The bond amount for a Drawback Bond is the average of all estimated claims in a 12 month period.
As with all Customs bonds, should your bond amount be inadequate according to Customs regulations, Customs will advise the importer and the surety company to increase the bond amount. They will give a reasonable amount of time to do so.
What is the Difference Between a Temporary Import and a Drawback Bond?
Temporary Import
This is used when the United States as a connection point for the final destination of a shipment of goods. If an importer’s goods are shipped from China to a U.S. port and then immediately shipped to Canada via Rail, the standard C1 customs bond with the Temporary Import under Bond addition would be required. Typically, temporary imports must leave within a specific amount of time after reaching U.S. soil.
Drawback bond
These bonds allow some goods to enter the U.S. and then partially or fully be reshipped elsewhere. For example, if an importer brings in a container full of clothing, then they ship it into their warehouse to be repackaged and sent elsewhere in the world, they would need a drawback bond. Customs will honor a 99.9% duty/fee forgiveness for goods that leave the U.S. in this manner.
TRG Underwriting Requirements for a Drawback Bond
When securing an Activity Code 1A Customs Bond from TRG, we will ask for:
- Fully complete bond application form
- Completed Power-of-attorney form
- The most recent company financial statements
Purchase your Customs Drawback Payment Refunds Bond from TRG. Apply online now.
