CBP Allows Retro Replacement of EBR Bond w/ Normal Continuous Bond for Shrimp Importers

U.S. Customs and Border Protection said it will cancel a continuous bond where the liability was calculated pursuant to enhanced bonding requirements (EBR bond) upon its acceptance of a qualified superseding (replacement) bond application for all importers who were not litigants in any of the National Fisheries Institute, Inc. (NFI) v. CBP court cases at the Court of International Trade.

Such superseding bonds must: (1) feature a liability in an amount no less than the dollar amount of the continuous importer bond that CBP would have accepted had the EBR requirement not existed on the effective date of the EBR bond (e.g., 10% of the total of duties, taxes, and fees paid to CBP for the 12 month period preceding the effective date of the original EBR); (2) must be for the same time period for which the related preceding EBR bond was in place; and (3) must include the posting of cash or other security for each annual period that the related EBR bond was in effect.

CBP said a superseding bond application, including supporting documentation, must be received by CBP within 90 days from the date that the related preceding EBR bond no longer secures any sum certain or contingent debt (including, but not limited to, unliquidated entries and penalties involving actual or potential loss of revenue) and matters subject to a pending protest.

(In 2006, CBP imposed enhanced bonding requirements on importers subject to antidumping and countervailing duty orders on frozen warmwater shrimp. At the time, CBP said such merchandise was in a “Special Category” because aquaculture was the industry sector with the highest share of defaults on AD/CV duties in the preceding years. In 2009, CBP ended the EBR bond requirement for imports of frozen warmwater shrimp subject to an AD/CV order in response to an adverse World Trade Organization ruling, but declined to terminate the EBR bonds retroactively (i.e., EBR bonds were enforced up until April 1, 2009). Subsequently, in response to CIT rulings in NFI v. CBP, CBP canceled the EBR bonds of litigants in the NFI v. CBP case upon their submission of superseding bonds. See ITT’s Online Archives 08071820 for summary of adverse WTO Appellate Body ruling, and 09040130 for summary of CBP’s non-retroactive revocation of EBR bonds. See also ITT’s Online Archives 10102520 for summary of CIT Ruling in NFI v. CBP.)

EBR Bond Must Not Secure Any Remaining Debt

CBP said it has decided to implement a policy whereby it will accept a qualified superseding bond application from any importer not a litigant in the NFI v. CBP case whose EBR bond meets the following conditions:

• Must not secure any remaining sum certain or contingent debt (including, but not limited to, unliquidated entries and matters subject to 19 USC 1592 (penalties for fraud, gross negligence, and negligence) involving actual or potential loss of revenue
• Must not cover entries that are subject to a pending protest pursuant to 19 USC 1514 or related regulations.

Superseding Bond Liability to Equal Comparable Non-EBR -Continuous Bond

Pursuant to this policy, CBP said a qualified superseding bond must meet the following conditions:

• A superseding bond must feature a limit of liability in an amount no less than the dollar amount of the continuous importer bond that CBP would have accepted had the EBR requirement not existed on the bond effective date of the EBR bond. For example, if an EBR bond features a face amount of $500,000 but would have featured a face amount of $70,000 but for the EBR requirement, then the superseding bond must feature a face amount of at least $70,000. A non-NFI importer can determine the correct amount of a superseding bond by multiplying the total of duties, taxes, and fees paid to CBP, for the twelve-month period immediately preceding the effective date of the original EBR, by ten (10) percent and rounding up as appropriate.
• A superseding bond must be for the same time period for which the related preceding EBR bond was in place. For example, if an EBR bond was in effect for a period from March 15, 2004, through April 1, 2005, then the superseding bond, despite its execution date in 2011, must secure entries for March 15, 2004, through April 1, 2005.
• A superseding bond posted pursuant to 19 CFR 113.40 must include the posting of cash or other security for each annual period that the related EBR bond was in effect.

Application Must be Received Within 90 Days of Expiration of EBR Bond

CBP said a superseding bond application, including supporting documentation, must be received by CBP within 90 days from the date that the related preceding EBR bond no longer secures any remaining sum certain or contingent debt (including, but not limited to, unliquidated entries (see 19 U.S.C. 1500) and penalty matters subject to 19 U.S.C. 1592 involving actual or potential loss of revenue).

Applications Must be Accompanied by Supporting Documentation

CBP said a non-litigant importer wishing to take advantage of this policy must ensure that CBP’s Bond Team Intech 1, within the Office of Administration’s Revenue Division, receives a qualified superseding bond application and supporting documentation within this 90-day period. The superseding bond application must be accompanied by supporting documentation that includes a statement as to the date the EBR no longer secured contingent liability, as well as a statement that the EBR does not cover entries that are subject to a pending protest pursuant to 90 USC 1514 or related regulations.

If Accepted, CBP will Notify Importer with Copy of CBP Form 301

CBP said if it accepts a qualified superseding bond it will notify the non-litigant importer by providing a copy of the superseding CBP Form 301 and will cancel the related preceding EBR bond. According to CBP, the superseding bond will be clearly annotated to distinguish it from the preceding EBR bond. An EBR bond is not canceled unless CBP notifies the import that the superseding bond has been approved.

CBP Contact -- Kara Welty (317) 614-4614