CBP's FAQ on Mandatory Advance Electronic Cargo Information Requirements

(Although this FAQ states that it covers all modes of cargo transportation, both inbound and outbound, CBP sources note that most of the questions and answers in the first version only pertain to inbound cargo. The final rule's requirements for all modes of outbound cargo are still expected be implemented concurrent with the completion of the redesign of the Automated Export System (AES) commodity module and the effective date of the Census Bureau's upcoming rulemaking to make AES filing mandatory for all exports.)

This is Part III of a multi-part series of summaries of the February 12, 2004 FAQ, and covers FAQ 7 on bonds. See future issues of ITT for additional summaries.

FAQ 7 - Bonds

Party responsible if information from shipper (product description, quantity, etc.) was relied upon. According to CBP, the party that provides the cargo declaration information to CBP is responsible for ensuring that the information is accurate. CBP will initially use informed compliance with the carriers, but if repeated violations occur CBP may assess penalties or claims for liquidated damages.

Policy for assessment of penalties and claims for liquidated damages. CBP states that it is currently formulating its policy with regard to the assessment of penalties and claims for liquidated damages. Once the assessment policy has been approved, CBP will establish mitigation guidelines.

CBP's December 5, 2003 final rule indicates that in addition to penalties applicable under other provisions of law, carriers may be liable for civil penalties under 19 USC 1436. Authorized transmitting parties may be liable for liquidated damages under 19 CFR 113.64(c).

Requirement to obtain an international carriers bond. CBP states that ABI filers must have an Activity Code 1 Importer or Broker Bond. CBP further states that all other Automated Manifest System (AMS) participants that are transmitting their cargo declarations electronically to CBP, whether directly or through the use of a service provider or port authority, must obtain an international carriers bond (i.e., an Activity Code 3 International Carrier Bond). According to CBP, once a continuous bond is on file with CBP it is valid for all ports of entry.

Activity Code 3 International Carrier Bond amounts. According to CBP, all air, rail and sea carriers are required to be AMS participants, authorized transmitting parties (NVOCCs, a Container Freight Station/deconsolidator, an Express Consignment Carrier Facility) who have decided to become automated must all have a Activity Code 3 International Carrier Bond.

CBP states that it has issued guidelines on these bonds to its field offices. The minimum bond amount has been established at $50,000, but the amount may be higher. According to CBP, actual bond amounts are determined by the port director where the bond is filed and are based on risk.

Activity Code 2 Custodial Bond amounts and fees. CBP states that AMS participants are required to have a Activity Code 2 Custodial Bond if business practices involve creating in-bond shipments, initially bond requirements will be set in the amount of $50,000.

However, Port Directors may increase the bond amount at their discretion. If you do not have a Custodial Bond, contact a surety company from a list of Treasury approved surety companies that are listed at www.fms.treas.gov/c570/index.html/ to obtain a bond.

CBP states that information on the bond requires that foreign entities have a CBP assigned number. Request for CBP Assigned numbers must be made on CF 5106 "Importer ID Input record," which can be found on CBP's Web site (www.cbp.gov). Completed forms should be sent to the Entry Branch of the local port for input into ACS. Upon receipt of a completed CF 5106, CBP will assign an "Importer Number" to a foreign-based entity.

According to CBP, the CF 5106 can be completed by the foreign entity and submitted to CBP and there is a $50 processing fee associated with this transaction. A copy of the form, with the CBP-assigned number indicated in block 2D, will be returned to the applicant. This CBP-assigned number will be the identifying number for the foreign entity on the bond application.

Authorized transmitting parties and in-bond movement options. Regarding authorized transmitting parties and in-bond movement options, CBP states that:

The authorized transmitting party may contract the in-bond movement with the transporting carrier.

The authorized transmitting party can obtain a Custodial Activity Code 2 bond and establish themselves as a paperless master in-bond participant.

The authorized transmitting party can approach the carrier or contract with another bonded carrier and obtain a Power of Attorney to obligate their custodial bond. The authorized transmitting party would then use an AMS conventional in-bond.

The authorized transmitting party would request and receive authorization to move cargo in-bond by transmitting through AMS a nine digit in-bond control number and bonded carrier identification number. It is not necessary to submit the paper CF 7512 at the port of in-bond origin (port of unlading), but the in-bond documentation must be presented to CBP at destination.

The authorized transmitting party is responsible for ensuring that the paper CF 7512 is presented to CBP at the destination port prior to the cargo being released to the consignee or exported as well as arriving and exporting the cargo in AMS.

Contract the in-bond movement to a bonded carrier that will create a paper CF 7512 to present to CBP at port of origin and destination.

Brokers in the ABI module can use the "QP" application or the "CAFES" application to create In-bond movements against AMS bills of lading.

Questions concerning bond amounts, etc. CBP states that if a carrier or authorized transmitting party believes that the port director is not following the minimum standards or has set an unreasonable bond amount or have any other questions concerning bonds, they should contact Donald Yando, Branch Chief, Entry and Drawback Management, at (202) 927-0300.

(See ITT's Online Archives or 02/19/04 and 02/20/04 news, 04021905 and 04022010, for Parts I and II of this multi-part series of summaries.

See ITT's Online Archives or 01/20/04 news, 04012035, for final installment of BP's summary of CBP's response to comments received on the proposed version of this final rule, with links to earlier installments. See ITT's Online Archives or 12/16/03 news, 03121610, for final installment of BP's summary of the final rule's regulations, with links to earlier installments.)

CBP states that interested parties with additional questions that are not included in this FAQ document should write to Manifest.Branch@dhs.gov.

CBP FAQ Document (dated 02/12/04) available at http://www.cbp.gov/ImageCache/cgov/content/import/communications_5fto_5ftrade/mandatory_5fadvanced_5felectronics/tpa_5ffaqs_2edoc/v1/tpa_5ffaqs.doc.