CBP Finds Surety Liable for Additional Duties Owed Despite Bond Termination

A surety is still liable for the additional duties owed to CBP despite the termination of the continuous bond associated with the entry, CBP found in a recently posted ruling (here). The ruling, HQ H236481, examined the claims from the surety, Ullico Casualty Co., that it is no longer responsible to pay for the duties. Ullico said it was not liable for the duties because CBP failed to collect the required cash deposit and the bond is since terminated.

The ruling involves imports of mushrooms entered in 2010 from China that were subject to antidumping duties. At the time, CBP did not collect a cash deposit from ETC, the importer of record, and Ullico terminated the associated continuous bond the following month, the ruling said. Then in 2011, the Commerce Department published amended final results for the antidumping administrative review that included the subject imports and called for a cash deposit and an antidumping rate of 2.17 percent. As result, CBP liquidated the entry based on those instructions and billed Ullico for the duties owed.

Ullico protested, saying that "CBP cannot use a bond to recover antidumping duties for which CBP was required to collect a cash deposit" and "the bond is unenforceable for the amount of cash deposit that CBP should have accepted at the time of entry." CBP wasn't persuaded by that argument because "regardless of whether CBP should have collected" a cash deposit, "Ullico’s bond is still liable up to the bond amount for any unpaid duties, including antidumping duties." The U.S. system of retroactive assessment is well understood and the courts have said a continuous bond can be used to secure payment of antidumping duties up to the bond amount, said CBP. While CBP in this case correctly didn't require a cash deposit, the agency has also previously "ruled that even in instances where CBP erroneously accepted a bond in lieu of a cash deposit, it did not relieve the importer from his statutory obligation to pay the existing cash deposit requirement," it said.

The claim that Ullico's bond is not liable because it was terminated before it was obligated is also misguided, said CBP. "Under applicable law, the actual amount of duty may not be fixed for several years after the date of entry," said CBP. "The termination of bond liability concerns the future obligation against the bond and it has nothing to do with cancelling existing liability." Therefore, "Ullico’s bond is liable to cover all additional duties, taxes, and charges found due on the entry that was secured by its bond," the agency said.