Bond claims are an important element of the importing process to understand. A breach of bond or violation of law can start off the process. A breach of bond will result in liquidated damages from Customs; a violation of the law results in a penalty. Both liquidated damages and penalties are sent to the importer on CBP Form 5955A. Once the notice is received, the importer of record has 60 days to act on it. The two courses of action at this point are either to pay the penalty, or petition it. There is no time limit for CBP’s processing of a petition.
If the original petition is denied, there are two remaining choices: an importer must either pay the penalty, or file a supplementary petition if they feel the original ruling should be reconsidered. Once again, there is a 60 day period for the importer of record to act. If an importer chooses to file a supplementary petition and it is subsequently denied, they must pay the penalty. Unfortunately, failure to pay the penalty results in a demand on surety, which is definitely something to be avoided, as there are several consequences associated with it.
A demand on surety is the turning point at which a bond provider gets involved with the claim payment process. Once a claim reaches this status, serious repercussions can be expected to follow. Many sureties are willing to terminate a bond as a result of an importer having too many demands on surety, so paying a claim before this point is of the highest importance. If the principal cannot or will not pay the claim at this point, they can be placed on a sanction list which will inhibit them from obtaining a new bond, or importing at all.
To avoid these consequences, there are several tools available. Some sureties offer software or web applications to assist their clients in avoiding demands on surety. With all this in mind, it is important to remember that vigilance is the key to a successful operation.
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