HQ 0223421 - Use of Multiple Bonds to Secure a Single Vessel Repair Entry; 19 U.S.C. 1623; 19 CFR 113.37(f); 31 CFR 223.11 - United States International Trade Commision Rulings

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HQ 223421

October 24, 1991

BON-1-02-CO:R:C:E 223421 PH

CATEGORY: BONDS

Deputy Assistant Regional Commissioner
Commercial Operations
South Central Region

RE: Use of Multiple Bonds to Secure a Single Vessel Repair Entry; 19 U.S.C. 1623; 19 CFR 113.37(f); 31 CFR 223.11

Dear Sir:

In your memorandum of August 13, 1991 (File: VES-13-18- V:O:CO:L GNS), you requested our advice on the use of multiple bonds to secure a single vessel repair entry. Our advice follows.

FACTS:

You state that in the case of two recent vessel repair entries, two single transaction bonds were used for each of the entries. You provided copies of the vessel repair entries and the bonds. You also provided copies of correspondence from the representative of the vessel owner or manager. According to this correspondence, two bonds were necessary for the respective entries because no surety with which the vessel owner or manager does business would write a bond for it in the necessary amount and the two sureties concerned had refused the request of the vessel owner or manager to share portions of the same bond. You request a ruling on the propriety of this practice.

ISSUE:

May more than one single transaction bond be used to secure a single vessel repair entry?

LAW AND ANALYSIS:

Under section 623, Tariff Act of 1930, as amended (19 U.S.C. 1623), Customs is authorized to prescribe the conditions and form of any bond required or authorized by law, and provide for the approval of the sureties on such bond. The Customs Regulations governing Customs bonds are found in 19 CFR Part 113.

The statutory and regulatory authority for vessel repair duties, and for a bond for those duties, are found in 19 U.S.C. 1466 and 19 CFR 4.14 (see, in particular 19 CFR 4.14(b)(1)).

Customs has a long-standing, consistent practice in this matter. We have consistently refused to accept two bonds cover- ing the same transaction in an effort to avoid any unnecessary uncertainty as to which surety is liable for a breach. Enclosed are copies of two ruling letters (211391, dated November 26, 1980, and 213012, dated November 5, 1981) to this effect. As we stated in the 1981 ruling letter, "the Customs Service perceives no valid reason to change the general policy of not accepting more than one vessel bond to cover the entry and clearance of one vessel."

The policy of refusing to accept two bonds covering one vessel repair entry is distinguished from the provision in 19 CFR 113.37(f), under which two or more sureties may act as corporate sureties on the same obligation (i.e., they may act as surety on one bond, under the conditions in that provision). The regula- tions governing surety companies doing business with the United States (see 31 CFR Part 223) also contain provisions for under- writing obligations in excess of the underwriting limitations of a particular surety (31 CFR 223.11). A copy of 31 CFR Part 223 is enclosed.

HOLDING:

More than one single transaction bond may not be used to secure a single vessel repair entry.

Sincerely,

John Durant, Director

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