CAFC Grants US Dismissal of Customs Bond Penalty Action Against Surety Co.

The U.S. Court of Appeals for the Federal Circuit dismissed the government's appeal of a Court of International Trade decision scrapping a customs bond penalty action against surety firm American Home Assurance Co. The U.S. voluntarily dismissed the case (see 2404170042) (U.S. v. American Home Assurance Co., Fed. Cir. # 24-1069).

The trade court found the government's decades of inaction before looking to collect nearly $400,000 in unpaid duties from AHAC meant it was barred from alleging that the surety was in breach of the eight single transaction bonds at issue. The court said the six-year statute of limitations for CBP to collect on customs bonds starts from the date of the underlying entry's liquidation and not from the date that CBP demanded payment (see 2308220054).

The decision conflicts with a separate recent CIT ruling, which said the statute of limitations starts when CBP makes the demand for payment (see 2403180059). However, in that case, the court said the government waited too long to collect payment, violating an implied term of the customs bond "of a reasonable time for demand."

Taylor Pillsbury, counsel for AHAC, said in an email that at some point "the disparate opinions as to when the 6 year statute of limitations to collect against a customs surety begins to run will need to be reconciled."