Cargo Systems Messaging Service

CSMS # 64569901 - In-bond Transportation of Pipeline Natural Gas and Storage Restrictions

This CSMS is intended to remind the trading community regarding the requirements applicable to pipeline in-bond movements and authorized activities during such movements.

An in-bond movement governed by 19 C.F.R. Part 18 is limited to transportation, specifically: transportation of imported merchandise, secured by a bond, from one port to another prior to the appraisement of the merchandise and without the payment of duties. 19 C.F.R. § 18.1(a). An entry to transport merchandise in-bond may not be used to store merchandise. Accordingly, although there is no maximum in-transit time for in-bond pipeline transportation, any product transported by pipeline must in fact be transported (and not stored) through the pendency of the transportation entry.

If CBP has reasonable cause to suspect that the merchandise covered by a pipeline in-bond movement is instead being stored, rather than transported, CBP may request evidence of ongoing transportation movements. If the ongoing transportation cannot be substantiated to CBP, the entity whose bond is obligated on the transportation entry may be liable for liquidated damages if there is a failure to comply with any of the requirements in 19 C.F.R. Part 18, in addition to any duties, taxes, and fees that may be owed for any missing merchandise, together with all costs, charges and expenses, caused by the failure to make the required transportation, report, delivery, entry and/or exportation.  See 19 C.F.R. §§ 18.8(a)-(c); 18.31(c)-(d); 19 C.F.R. §§ 113.63(a)-(c), (i)(5), (j). Liquidated damages may also result from failure to comply with any other regulations governing the movement of merchandise in bond or any other bond conditions.  See 19 C.F.R. § 18.8(b). 

In the alternative, evidence establishing the fact of exportation, such as a foreign landing certificate at a foreign destination, or evidence that the transportation movement has been completed, such as an admission to a Foreign Trade Zone or entry for consumption, may be provided to close out the transportation entry and discharge the bond. If the entity whose bond is obligated for the in-bond transportation failed, in the first instance, to provide such evidence within 2 business days of the exportation, CBP may assess liquidated damages.  See 19 C.F.R. §§ 18.1(h), 18.7(a)(3); 19 C.F.R. §§ 113.63(c)(1), (j).

All parties involved with the transportation of natural gas via pipeline are reminded of their record keeping requirements as outlined in 19 CFR 163.  All records relating to the transportation of natural gas are required to be maintained and presented to CBP upon request. See, e.g., 19 C.F.R. § 18.7(c).