Overview
A bond is a written legal contract executed under seal whereby the person or persons entering into it bind themselves to pay to some other person or body a specified sum of money, known as penalty if any of the conditions of the bond are not performed.
The person who has given the bond is also known as surety, and the person to whom he/she has given it is also known as principal.
These conditions can be anything from performing an act or making a promise. When you sign a bond for someone, you are agreeing to pay that person back if they do not perform what was promised in the contract.
Type of Bonds
Tender Bonds
A tender bond is a type of bond that is issued by a procuring entity (such as a government agency) to secure the performance of a contract. It gives the beneficiary the right to call the bond on demand within a specified period and for a maximum specified amount.
Advance Payment Bond
Advance payment bond is a financial instrument that ensures the completion of the contract by obligee. The principal deposits the amount of money into the account of the obligee as a down payment. If the obligee fails to perform his obligation, he will have to refund it to the principal.
Performance Bonds
Performance bonds are an important part of any business.
The performance bond protects both parties in case something happens and it ensures that all obligations will be fulfilled on time.
Customs Bonds
There are two classes of Bonds namely:
Particular Bonds – These are executed to cover one specific transaction.
General Bonds – These are executed to cover several transactions over an unspecified period.
enefits and Advantages of Bonds To The Principals/Obligors
- Liquidity of funds.
- Multiple Projects.
- Convenience.
Benefits and Advantages of Bonds To The Owners/Obligees
- Faster Commercial Transaction.
- Guarantee from a third party.
- Economic activity.
Types of Customs Bonds
| TYPE | DEFINITION | PB/GB | DURATION |
|---|---|---|---|
| CB 1 | delivery of perishable goods or other goods prior to payment of duty | Both | PB – 48 hrs GB – 3 Yrs |
| CB(1A) | Delivery of project goods entered provisionally before payment of duty | PB Only | 90 Days |
| CB 2 | Removal of goods from one port or place to be examined and entered at another port/place |
Both | PB – 48 hrs GB – 3 Yrs |
| CB 3 | Warehousing of goods or removal of warehouse goods | Both | PB – 21 Days GB – 3 Yrs |
| CB 4 | Exportation of goods | Both | PB – 45 Days GB – 3 Yrs |
| CB 5 | Shipment of stores e.g. provided to planes or ships | Both | PB – 30 Days GB – 3 Yrs |
| CB 6 | General bond for the security of warehoused goods | GB Only | GB – 3 Yrs |
| CB 7 | Shipment of goods forebeentry – goods are shipped and documentation is done later |
PB Only | 96 Hrs |
| CB 8 | Transit Bond | GB Only | 3 Years |
| CB 9 | Transshipment bond | Both | PB – 30 Days GB – 3 Yrs |
| CB 10 | Re – exportation of imported goods delivered without payment of duty | PB Only | 1 Years |
| CB 11 | Bond for Customs Agents | GB Only | 3 years |
| CB 12 | Conveyance of goods subject to customs control | GB | GB – 3 Yrs |
| CB 13 | For goods imported for use in the production of goods for export | PB Only | GB – 3 Yrs |
| CB 14 | Removal of goods to and from an EPZ | GB | 9 Months |
| CB 16 | For project goods imported and delivered without payment of duty | PB | 1 Years |
| CB 18 | For security of goods in a transit shed or a Customs Freight Station | GB Only | Until retired |
| EB 1 | Bond for hetpayment of Excise duties | GB Only | 3 years |
| EB 3 | Bond for licensed manufacturer | – | – |
| – | Security to Customs | PB Only | Until retired |
| – | Customs Transit Guarantee | Both | PB – 90 Days GB – 3 Years |
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