Trade Court Rejects CBP Increase of Importer's Continuous Bond Sufficiency Requirement
The Court of International Trade on Dec. 7 ruled in favor of an importer challenging increased CBP bonding requirements, finding them unnecessary given the importer’s future import plans and detrimental to the importer’s ability to remain in business. Unusual circumstances related to the importer’s shipments from the previous year, as well as the importer’s practice of withdrawing from a bonded warehouse for consumption, mean the importer’s current continuous bond should be sufficient, CIT said.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
CBP had on Sept. 28 told Tabacos USA, an importer of “value priced” tobacco products,” to increase its bond from $300,000 to $400,000, based on an increase in import value over the previous 12-month period. Tabacos USA said the increase was only due to a late arriving shipment, as a container scheduled to arrive in August 2017 instead arrived one month later, putting it in the yearlong window CBP looks at to determine bond sufficiency.
The importer asked CBP to reconsider, but was denied. It filed suit Oct. 26. CIT granted the case “an immediate opportunity to be heard,” issuing a temporary restraining order and proceeding to a quick trial.
Tabacos USA said it had been in a general downturn since 2014, and its surety required it to fully collateralize its bonds. The importer could not raise the amount required, it said. Tabacos USA also provided evidence that, for the next 12 months, a $300,000 bond would be sufficient. Also, under CBP’s regulations, CBP is required to consider not only the value of the merchandise to be secured, but also the importer's compliance record and history of on-time payments, the degree of CBP supervision over the merchandise (in this case, the goods were to be held in a bonded warehouse), and any additional relevant information (such as the container’s late arrival throwing off the previous year’s import value), Tabacos USA said.
Confidential information provided by Tabacos USA “indicates such current inventory in a bonded warehouse that the plaintiff will not order more imports for months to come, thereby continuing to ensure the future sufficiency of its current continuous entry bond,” CIT said. “This court cannot and therefore does not disregard the compelling evidence” that the $300,000 bond is sufficient, it said. CBP may increase the bond if Tabacos USA’s “business were to materially change,” but as things currently stand, CBP’s Sept. 28 demand was “an abuse of discretion,” CIT said.
(Tabacos USA, Inc. v. CBP, Slip Op. 18-170, CIT # 18-00221, dated 12/07/18, Judge Aquilino)
(Attorneys: Neil Mooney for plaintiff Tabacos USA; Monica Triana for defendant CBP)