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A guide on the customs clearance process in India

Customs clearance refers to the process of clearing goods through customs for import or export. Learn more about the documents and steps to follow in the blog.

Exporting goods to international markets involves many processes that must be followed to ensure compliance with international trade regulations. One of the most important steps in the export process is customs clearance. This is where the goods are cleared for exit or entry from one country into another country while complying with all regulatory requirements.

What is customs clearance?

Customs clearance is the process of clearing goods through customs for import or export. It involves a series of documentation, and regulatory requirements that must be followed to ensure compliance with local and international laws. The customs clearance process involves verification of contents of the shipment, determination of applicable taxes, duties, and tariffs, and issuance of necessary permits and licenses. Customs clearance is essential for the smooth movement of goods across borders, and failure to comply with the requirements can result in delays, penalties, or even the seizure of goods¹.

When is custom clearance required?

Customs clearance is required whenever goods are being imported or exported across international borders. The customs clearance process ensures that the goods being transported comply with all applicable laws and regulations, including those related to health, safety, and security. The customs clearance process is necessary to verify the contents of the shipment, determine the applicable taxes, duties, and tariffs, and issue the necessary permits and licenses for the goods to enter or exit a country. Failure to comply with the necessary customs clearance requirements can result in delays, fines, or even the seizure of goods. Therefore, customs clearance is a critical step in the import and export process that must be followed by all businesses involved in international trade.

Documents required for customs clearance

Customs clearance process requires submission of various documents with information about the goods being imported or exported. Here are some of the common documents required:

Commercial invoice:

Commercial invoice is a document that lists the details of goods being shipped, including description, quantity, price, and terms of sale.

Packing list:

Packing list is a document that lists contents of each package or container, including weight and dimensions.

Bill of lading:

Bill of lading is a document that serves as a contract between the exporter and the carrier, providing details about goods being shipped, route, and terms of delivery.

Certificate of origin:

Certificate of origin is a document that verifies the country of origin of goods being shipped.

Export license:

Export license is a document that is required for certain goods or destinations, indicating that the goods can be legally exported.

Apart from these documents, clearance may also require other licenses and permits, depending on the nature of goods being shipped and destination country’s regulations.

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Step-by-step customs clearance process

Here is a commonly followed step-by-step customs clearance process:

Preparing for customs clearance:

The first step in the customs clearance process is to ensure that all the necessary documentation is in order. This includes commercial invoice, packing list, bill of lading, certificate of origin, and any other permits or certificates that may be required.

Arrival of shipment:

Shipment is received by customs authorities at the port of entry, and customs clearance processing begins.

Examination of goods:

Customs authorities may examine (physical inspection of the goods, laboratory tests, or X-ray scans) the goods to verify the information provided in the declaration and to ensure compliance with all regulatory requirements.

Assessment of duties, taxes, and fees:

Customs authorities assess applicable duties, taxes, and fees based on the information provided in the Entry Summary Declaration and results of the examination of goods.

Payment of duties, taxes, and fees:

The importer must pay applicable tariffs, taxes, and duties before goods can be released.

Customs clearance:

Once the importer has paid necessary fees, goods are cleared for import and can be transported to their final destination.

Delivery:

Goods are delivered to the importer’s warehouse or facility, or a designated location for pickup.

Things to keep in mind for a successful customs clearance

Here are a few important things to keep in mind for a smooth and successful customs clearance:

Self-assessment

Exporters can self-assess the duty expected to be charged on the goods being shipped and declare the right classification and quantity of goods along with the rate of duty. Based on this information in the shipping bill, a claim of exemption, if any, is filled. Other documents that are generated at this stage are insurance certificates, packing lists, certificates of origin, consular invoices, commercial invoices, etc.

Shipping bills

Shipping bills must be filled out by the exporter and filed electronically through ICEGATE or ICES service center. Often, shipping bills are either taken up for verification, examination or both or the exporter is given a Let Export Order (LEO).

Post clearance audit

A post clearance audit (PCA) of shipping bills is done to improve compliance levels, reduce cargo dwell time and speed up customs processing.

Proper documentation

Proper documentation is critical for successful customs clearance. It is important to ensure that all the necessary documentation is complete, accurate, and available. The commercial invoice, packing list, bill of lading, certificate of origin, and any other permits or certificates that may be required should be prepared in advance.

Classification of goods

Proper classification of goods is important for quick and hassle-free customs clearance. Each good being imported or exported must be classified according to its tariff classification, which determines applicable duties, taxes, and fees.

Clear communication

Clear communication is important to provide accurate and complete information of goods being imported or exported and to respond promptly to any requests for additional information.

Working with a trusted customs broker or freight forwarder

Custom clearance agents or freight forwarders are professionals who have expertise and experience to navigate through the customs clearance process, providing valuable guidance and support.

Adequate preparation time

It is important to allow sufficient time for preparation of documents, assessment of duties, taxes, and fees, and any necessary inspections or testing.

By keeping these things in mind, businesses can help ensure a successful customs clearance process, avoid delays or penalties, and maintain their reputation in the international trade market. The customs clearance process is a critical step in international trade, and it requires careful planning and attention to detail. Exporting from India has become easier and simpler with e-commerce exports programs that enable quick registration and provide support at every step of exports.

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Frequently Asked Questions

What is the custom clearance fee?

A custom clearance fee is the fee charged by customs authorities for the process of clearing goods through customs.

What goods need customs clearance?

Almost all goods being imported or exported need customs clearance.

How many days will it take to obtain customs clearance?

The time required to clear customs can vary depending on several factors, including type of goods being imported or exported, country of origin or destination, and any regulatory requirements that must be met.

Who is a customs broker?

A customs broker is a licensed professional who specializes in the customs clearance process. They are trained to provide guidance and support to importers and exporters in navigating the customs clearance process.

Who is in charge of customs clearance?

Customs clearance is typically the responsibility of the customs authorities in the country of import or export. These authorities are responsible for ensuring that all goods entering or leaving the country comply with applicable laws and regulations.

Can a shipment be held after passing customs clearance?

In some cases, a shipment may be held by customs authorities even after passing customs clearance. This can occur if there are concerns about the goods, or if additional inspections or documentation is required.

Who pays for customs clearance?

The cost of customs clearance is typically the responsibility of the importer or exporter, depending on the terms of the sales contract.

Published on May 25, 2023.

Sources:
1. https://stockarea.io/blogs/what-is-customs-clearance/
2. https://www.dripcapital.com/en-in/resources/blog/customs-clearance-process
3. https://www.crowley.com/all-about-customs-clearance/#:~:text=Customs%20clearance%20is%20

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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.