Bonded Goods: The Ultimate FAQ Guide

Bonded Goods

If you’re looking for any information about bonded goods, you will find it right here.

From definition, customs process, to examples of bonded goods – you will find everything you’re looking for in this guide.

Keep reading to learn more.

What are Bonded Goods?

Bonded goods are imported shipments that have not yet been cleared of taxes, duties, and other penalties.

These goods are stored in a warehouse location controlled by customs authorities, otherwise known as a custom bonded warehouse.

The goods are issued out only after the full payment has been made to customs authorities.

If the cost has not been met after a specified period, the goods must be destroyed or disposed of.

 Bonded goods

Bonded goods

What is the Difference Between Bonded Goods and Non-Bonded Goods?

Some of the differences between bonded goods and non bonded goods include:

  • Bonded goods refer to imported cargo for which duties, taxes, and customs charges have not been paid.
  • Non bonded goods, on the other hand, refer to a shipment that has been cleared of all taxes, duties, and customs or any other penalties.
  • Bonded goods are stored in a warehouse controlled by customs authorities, known as a custom bonded warehouse.
  • Non bonded goods, on the other hand, tend to be held in third party warehouses or the importer’s warehouse.
  • Bonded goods are issued only after payment has been made wholly to the customs authorities.

This might be disposed of if no charge has been made after a specified period.

Non bonded goods are also released after meeting all custom clearance procedures.

What are Some Bonded Goods Examples?

Some of the examples of bonded goods include:

  • Raw materials.
  • Acids for trade and business.
  • Chalk
  • Ammunition for trade and business.
  • Fireworks.
  • Dried fish.
  • Flammable or inflammable goods apart from petroleum products may be stored in places that are approved.
  • Packaging materials.
  • Spare parts.
  • Agricultural components or finished agricultural products.
  • Manufacturing components.
  • Production components.
  • Alcohol.
  • Tabacco.
  • Perishable goods.

What is a Bonded Warehouse?

A bonded warehouse is a place where goods are stored to undergo processing before they are delivered.

This warehouse can be owned either privately or by the government.

The distinguishing factor about bonded warehouses is that the goods are retained until they are cleared of customs duty.

These goods that are bonded are stored for a specified period, and taxes and responsibilities must be paid as required, failure to which they might be confiscated.

 bonded warehouse

 bonded warehouse

What are the Different Classes of Bonded Warehouses?

The different classes of bonded warehouses include:

  • Private warehouses of importers: these may be used to store cargo for the proprietor or consigned to them.
  • Owned or leased premises by the Government
  • Public bonded warehouse: this is used for storing merchandise that has been imported.
  • Bonded bins or elevators, or parts of buildings: these are used for keeping grain.
  • Bonded yards or sheds: mainly used to keep bulky and heavy cargo.
  • Bonded warehouses are put in place for manufacture in bond: they are mainly used for cargo requiring exportation.
  • Bonded warehouses constructed for refining and smelting metal-bearing materials for either domestic consumption or to be exported.
  • Bonded warehouses are referred to as “duty-free stores”: they are used to sell duty-free items and need to be used outside the customs’ territory.
  • Bonded warehouses constructed for cleaning, repacking, sorting, or changing the condition of the cargo.
  • Bonded warehouses constructed for storage of General Order cargo.
  • Bonded warehouse for international travel cargo.

 different types of bonded warehouses

different types of bonded warehouses

Who Manages a Bonded Warehouse?

A bonded warehouse may be managed by either the state or a private enterprise.

A bonded warehouse is a warehouse operated by a private company in a foreign country under the regulatory supervision of that country’s customs agency.

These warehouses can be government-owned or privately owned by large enterprises.

bonded warehouse system

bonded warehouse system

How Does Bonded Warehousing Work?

Bonded warehouse grants you the chance to defer paying for taxes and duties until the goods imported are distributed to be sold.

The bonded warehouse also allows a period whereby modifications such as sorting and packaging can be made to the goods while not paying tax or duty.

When the goods are dispatched from the bonded warehouse, duty and taxes need to be paid unless they are moved to another bonded warehouse.

What are the Benefits of Using a Bonded Warehouse?

Benefits of bonded warehouse include:

  • Grants full payment control to importer: it requires no payment of duty when the item is dispatched for delivery to the buyer.
  • Storage of restricted items: a bonded warehouse allows a prohibited item to be stored in it until they are ready for dispatch.
  • Versatile: bonded warehouse facilities are exceptionally equipped to handle different storage needs.
  • Protection: when you store your goods in a bonded warehouse, the warehouse’s authority gives you a bond.

This protects you from money loss when your shipment is released once you have paid the required taxes.

  • Additional logistics solutions: a bonded warehouse may provide a one-stop service for all logistics solutions because they come to include freight forwarders.
  • Proximity to ports: most of the bonded warehouses are situated near ports.

This will allow you to store the goods at the port of entry until ready for distribution.

  • Safety and security: they have security measures such as CCTV, accurate record documentation, and regular auditing, certifying.

This are reputable organizations.

  • Improved customer service: bonded warehouses offer a better customer experience as they can be ordered and stored in advance while anticipating demand.

Are there Alternatives to Bonded Warehousing?

Yes, there are alternatives to the bonded warehouse.

Some countries tend to have restrictions on the bonded warehouse, for example, lack of reliable postal solutions or express couriers.

In this case, a better solution would be using a warehouse situated in a free port.

Fulfillment centers might also be an alternative solution due to the following benefits:

  • They will help you save on duties and taxes.
  • Assist in easier shipping globally.
  • Well established and very connected.

When Does Customs Release Bonded Goods?

Customs release goods from a bonded warehouse once all the duties and taxes due are cleared.

The importer will need to make a customs declaration to remove the goods.

What is a Non-Bonded Warehouse?

A non-bonded warehouse is a place where goods whose duty has already been cleared are stored.

They are supervised by the authorities of the port rather than custom clearance authority.

They can be selected over bonded warehouses if the importers need to use the goods domestically rather than exporting them.

Once the non-bonded warehouse goods have been inspected and approved by customs, they can be delivered to a preferred location.

 non bonded warehouse

 non bonded warehouse

When Should You Choose a Bonded Warehouse vs. a Non-Bonded Warehouse?

Different situations will need additional storage measures as elaborated below:

  • Deferred duties: bonded warehouses tend to save money as the goods are stored in them while deferring responsibilities until released to their destination.

Compared to the non-bonded warehouse, the importer may cut up to thirty percent concerning taxes differed.

  • Storing restricted goods: non-bonded warehouses tend to have a restricted time limit within which local interests should be held, and paperwork approved.

Bonded warehouses, on the other hand, do not limit the probation period for storing restricted goods.

  • International shipping: for ease of shipping internationally, bonded warehouses are the best to import goods and store them without advance duty payment.
  • Stress-free option: bonded warehouses are very friendly to the importer as they allow easier storage and transportation of goods.

The environment also has security measures in place, and importers can defer taxes until the goods are delivered.

What is the Difference Between FTZ and Bonded Warehouse?

Foreign Trade Zone (FTZ) refers to secure areas situated in or near the entry ports and is legally outside the assessment by customs for entry purposes.

Bonded warehouses, on the other hand, are controlled and supervised directly by the customs officials.

In FTZ, there is no collection of duties until when the goods are withdrawn to be consumed, and the items have duty free exportation.

FTZ vs bonded warehouse

FTZ vs bonded warehouse

On the other hand, Bonded warehouses required duties and taxes to be cleared before the goods can be delivered.

Bonded warehouses only have permission to store foreign goods, and manufacturing is not permitted.

FTZ, on the other hand, has unlimited access and lacks control over the movement of items within the zone.

How Long Can Goods stay in a Bonded Warehouse?

Goods are only allowed to remain in a bonded warehouse for two to five years, depending on the county’s requirements.

Failure to be exported to another bonded warehouse or entered to be consumed before the time elapses.

What are the Advantages of Operating Bonded Cargo?

Some of the advantages of operating bonded cargo include:

  • Storage is often long term: in some countries, storage of bonded cargo is unlimited when there is increased demand.
  • Save haven for restricted goods: importing goods that are restricted can be quite a hustle. With the presence of bonded warehouses, importers can store prohibited goods until they obtain permission to enter the country.

What is Bonded Transport?

Bonded transport refers to vehicles that can carry shipments that have not yet been paid for through customs and have an authorizing license.

It makes it possible to transport your unbonded cargo to an official bonded warehouse for cargo awaiting payment of duties and taxes.

bonded transportation

bonded transportation

How Do You Transport Bonded Goods?

Transporting goods that are bonded is strictly controlled by customs, with considerations being made to:

  • Export the goods across borders.
  • Move the goods to a different bonded warehouse.

Depending on the situation, you will need to register at customs for any of the following to ensure transporting of your bonded goods:

Remover of Goods in Bond

If you would like to transport goods kept in a bonded warehouse and you would prefer using your means of transport, you may register with the remover of goods in bond.

This license for the remover of goods in bond may be obtained at customs by opening a bond.

Possessing a bond grants you the ability to move bonded goods even across borders, and it is an advantageous way of transport.

Transporter/Remover of Goods/Road Hauler

This refers to a third party hired to move bonded goods from one point to another on the client’s behalf.

It is a requirement for the goods to possess a bond.

The transporter must be issued with a document to certify the transporter has permission to use the bond for goods transportation.

This way of transporting bonded goods is advantageous when you have a bond and lack the means to personally.

Foreign Remover of Goods

Transportation of bonded goods can also be met by foreign road cargo transporters that wish to transport shipments that are bonded.

This foreign entity does not have the permission to register its bond, but the country’s agent should undertake this on their behalf.

This type of bond is referred to as a consignor bond.

Carrier

In case you would like to cross national borders, you may need to register as a carrier or transport bonded goods using a carrier.

Carrier registration must submit the necessary documents needed to cross custom borders.

What is Bonded Shipment?

Bonded shipment refers to a load that is being shipped through the United States but not to the United States.

This type of shipment will not require clearance with the customs or payment of duties and taxes during the import process as it is only passing through the country.

 bonded shipment

bonded shipment

What is the Difference Between Bonded Goods and Bonded Shipment?

Bonded goods are imported shipments that have not yet been cleared of taxes, duties, and other penalties.

On the other hand, bonded cargo refers to a load that does not require clearance for customs or payment of duties and taxes as it is only passing through the United States.

Bonded goods are stored in a warehouse location, which is controlled by customs authorities, otherwise known as a custom bonded warehouse.

On the other hand, the bonded shipment does not require being stored in a warehouse as they are only passing through the country to another location.

The bonded goods are only issued out only after the full payment has been made to customs authorities.

If the payment has not been met after a specified period, the goods must be destroyed or disposed of.

What is in the Bonded Shipping?

An in bonded shipment is an extraordinary document that allows you to move and store cargo without being commercialized in a specific country.

In bonded shipment permits the bonded carrier to move cargo and store it without paying duties and taxes.

It is important to note that bonded shipment is only eligible for transportation by bonded carriers, and storage should be in warehouses that are authorized.

Do you Need Shipping for Bonded Shipments?

You will require your bonded shipments to be transported by a bonded carrier and, where necessary, kept in a bonded warehouse.

How do you Choose a Shipping Partner for Bonded Shipments?

When choosing a shipping partner for bonded shipments, it is essential to find a well-experienced company licensed in custom regulations.

These companies will be able to guide you in every step required in passing international shipping requirements.

Due to transportation, it is essential to find a shipping partner who has a facility for bonded cargo and can offer bonded transport.

Obtaining all the above options in a single stop will prove to be very convenient for your company.

Shipping partners who contain accredited warehouses can also assist in repackaging your bonded cargo and any other shipment needs.

Having in place shipping partners who are licensed also puts your business in a better place as they may accept payments on the Government’s behalf.

This will put them in a better position of serving as intermediaries between customs and your business.

Can you Modify Goods Stored in a Bonded Warehouse?

Yes, goods stored in a bonded warehouse can be modified. Some of the modifications which can be done on these goods include:

  • Marking.
  • Testing.
  • Labelling.
  • Packaging.
  • Grading.
  • Dilution
  • Inspection.
  • Service maintenance.

How do you Inspect Bonded Goods?

Once goods arrive at any bonded warehouse, the officer in charge must:

  • Checkmarks and numbers: the officer should inspect and verify the marks and numbers compared to the numbers indicated on the packages.
  • Ascertain quantity: the package quantities should be confirmed to verify that they tall with the number indicated in the accompanying documentation.
  • Examine damaged packages: an examination of any packets suspected to be tampered with should be conducted if possible in the presence of the transport agent.
  • Once all this is done, and the goods are verified to be okay, they should then be appropriately stacked in the bonded warehouse and stock record.

How do you Determine Shipping Duty tax for Bonded Goods?

Duty tax refers to the tax imposed by countries on foreign goods.

This must be paid to the Government before the importer receives their goods.

For bonded goods, the goods enter the country as part of its transportation, and thus, the importer is required to post a bond to customs.

This bond is used as collateral for the duty tax imposed on the goods.

In case the importer of the bonded goods moves them to another country, it is possible to redeem the bond paid to customs and be refunded the customs deposit.

When do you Pay Import Duty and taxes for Bonded Goods?

Import duty and taxes for bonded goods are paid when goods are dispatched from the bonded warehouse and issued to the market.

Who is a Bonded Carrier?

Bonded carriers are individuals or organizations who can bring cargo past the entry port into an authorized location without customs release.

 bonded carrier

 bonded carrier

What is the In-Bond Process?

The inbound process follows a series of steps, which include:

  • First, the bonded carrier reports the shipment as an inbound shipment to the customs authorities.

The airline should report the load as in on the manifest, and the driver should write it on arrival at the border.

  • Once this is done, a customs officer will then grant authorization for the shipment to be moved.
  • After this, the carrier will deliver the cargo to a specified warehouse or another customs officer to wait for release by customs.
  • Before the goods are taken out of the warehouse, the carrier needs to wait for an official entry filing issued by the importer or customs broker.

What are the Benefits of using a Bonded Carrier?

Bonded carriers can:

  • Move goods to an inland office that is not located at the border to release the shipment.
  • Advance goods “in transit” from one destination to another.
  • Streamline the process of import or export, and this will save you both time and finances.
  • Give you peace of mind as they will ensure that all your shipments meet all customs protocol.

What is the Difference Between a Bonded Carrier and a Non-Bonded Carrier?

Non bonded carrier must give way the shipment at the point of receipt, which can be a frontier.

On the other hand, a bonded carrier can move freight away from the boundary for carrying out customs and for the goods to be released.

On the other hand, bonded carriers help to speed up the importation or exportation process of cargo to cut down on costs.

Can a Non-Bonded Carrier Carry Bonded Goods?

Yes, a non-bonded carrier may carry bonded goods because they should purchase a bond for a single trip.

It is important to note that only bonded carriers are permitted to use the in-bond process.

Non-bonded carriers have a carrier code beginning with one or seven, and they must post a single trip bond before moving goods inbound.

The single trip bond can be obtained either through paying the customs authority by cash or certified cheque or receiving it through a customs broker.

Can you Remove Goods in Bond through Any Port of your Choice?

No, you cannot remove goods in bond through a port of your choice.

This is because customs grant permission to interests in a bind to pass via land custom-designated at the border ports of exit and entry.

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