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What is customs clearance? A guide on customs clearance process

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.

Customs clearance is a crucial process in international trade. Smooth customs clearance can help avoid significant financial setbacks and supply chain disruptions. Understanding the intricacies of customs clearance is vital for all businesses, and can help streamline international trade operations and ensure compliance with regulatory standards. This blog post provides a comprehensive guide to the necessary documentation, procedures, and potential costs involved in customs clearance.

What is customs clearance?

Customs clearance is the process of clearing goods through customs for import or export. It involves 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. Failure to comply with requirements can result in delays, penalties, or even the seizure of goods.¹

When is customs 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.

Documents required for exports customs clearance

Certain documents are required to demonstrate compliance with regulations. These can vary based on the destination and the nature of the goods. Some documents that may be required for exports customs clearance from India are:

● Commercial invoice:

Provides details of the transaction.

● Packing list:

Lists shipment contents, dimensions, and weight.

● Shipping bill:

Mandatory document for export customs clearance.

● Bill of lading or Air waybill:

Serves as proof of shipment.

● Export license:

Document needed for restricted goods.

● Letter of credit (if applicable):

Guarantees payment security.

● Certificate of Origin:

Indicates the manufacturing country.

● Insurance certificate:

Proof of insurance coverage for the shipment.

● Proforma invoice:

A preliminary invoice issued before shipping.

● Export declaration form (EDF):

Required for foreign exchange regulations.

● Inspection certificate:

Verifies the quality and standard compliance of goods.

● Bank realization certificate (BRC):

A proof of payment realization for exports.²

View export documentation requirements on Export Navigator

View export documentation requirements on Export Navigator
Export Navigator is a one-stop dashboard that provides Indian exporters with guidance on compliance across five key areas — export registration, product documentation, shipping documentation, tax documentation, and payment reconciliation. Use the dashboard to understand regulatory requirements for your business and get end-to-end support from third-party service providers to obtain the necessary documents. Export Navigator is available to all Indian exporters, including those not registered on Amazon.

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Documents required for imports customs clearance

Documents for imports customs clearance are similar to export customs clearance. Some import-specific documents that may be required by Indian customs authorities include:

● Import license (if applicable):

Required for certain goods.

● Certificate of Origin:

Indicates the manufacturing country.

● Customs duty payment receipt:

Proof of duty and tax payments.

● Insurance certificate:

Proof of insurance coverage for the shipment.

● Proforma invoice:

A preliminary invoice issued before shipping.

● Health and safety certificates:

Required for specific product categories.

● Test reports:

Needed for regulatory compliance on certain goods.

● Warehouse receipt (if applicable):

Required for bonded warehouse imports.³

Customs clearance procedures in India for export:

Here is an overview of the steps involved in export customs clearance in India:

Step 1: Obtain an Importer Exporter Code (IEC):

Before initiating any export activity, businesses must obtain an IEC from the Directorate General of Foreign Trade (DGFT). This 10-digit code is mandatory for all exporters in India.

Step 2: Select the right port and Customs House Agent (CHA):

Choosing the appropriate port of shipment and engaging a licensed CHA is crucial. The customs house agent acts as an intermediary, handling all customs-related formalities.

Step 3: Prepare export documents:

This involves preparing essential documents such as the commercial invoice, packing list, shipping bill, certificate of origin, and other relevant documents based on the nature of the goods and the destination country.

Step 4: File the shipping bill:

The exporter or their CHA must file the shipping bill electronically with the Indian Customs’ Electronic Data Interchange (EDI) system. This document contains detailed information about the goods, the exporter, and the importer.

Step 5: Examination of goods (if required):

Customs officials may conduct a physical examination of the goods to verify the declared details and ensure compliance with regulations. This examination is for risk assessment.

Step 6: Pay export duty (if applicable):

If the exported goods are subject to export duty, the exporter must pay the required amount through designated channels.

Step 7: Obtain the Let Export Order:

Once all formalities are completed and the customs officials are satisfied, they issue the Let Export Order, which authorizes the shipment of the goods.

Step 8: Hand over goods to shipping line/airline:

After receiving the Let Export Order the goods are handed over to the shipping line or airline.

Step 9: Obtain proof of export:

The exporter must obtain proof of export, such as the bill of lading or airway bill, which serves as evidence of the shipment.⁴

Customs clearance procedures in India for import:

The step-by-step process for imports customs clearance in India includes:

Step 1: Obtain an Importer Exporter Code (IEC):

Like exports, importers must possess a valid IEC issued by the DGFT.

Step 2: File the Import General Manifest (IGM):

The shipping line or airline files the Import General Manifest, which provides details of the incoming shipment, with the customs authorities.

Step 3: File the bill of entry:

The importer or their CHA must file the bill of entry electronically with the Indian Customs EDI system. This document declares the imported goods and provides information necessary for duty assessment.

Step 4: Assessment of duty:

Customs officials assess the applicable import duty based on the declared value and classification of the goods according to the Harmonized System of Nomenclature (HSN) code.

Step 5: Pay import duty:

The importer must pay the assessed import duty and any other applicable charges, such as integrated goods and services tax (IGST) and compensation cess, through designated channels.

Step 6: Examination of goods (if required):

Customs officials may conduct a physical examination of the imported goods to verify the declared details and ensure compliance with regulations. This examination is based on risk assessment.

Step 7: Obtain the Out of Charge Order:

Once all formalities are completed and the customs officials are satisfied, they issue the Out of Charge Order, which authorizes the release of the goods from customs custody.

Step 8: Clear goods from the port/airport:

After obtaining the Out of Charge Order the importer can then remove the goods from the port or airport.

Step 9: Maintain records:

Importers are required to maintain accurate records of all import transactions for a specified period, as mandated by customs regulations.⁵

What are customs clearance charges?

Custom clearance charges are calculated based on various fees associated with the process, including:

● Customs duty:

Levied based on the Harmonized System (HS) code.

● GST & other taxes:

Applicable on imports.

● Handling fees:

Charged by customs brokers or freight forwarders.

● Inspection fees:

Applied if additional verification is required.

● Port storage charges:

Incurred for delayed shipments.

Customs clearance charges can vary depending on the goods and the country.⁶

Things to keep in mind for successful customs clearance

Here are some things businesses can keep in mind to ensure a smooth and stress-free customs clearance process:

• Self-assessment:

Exporters can self-assess duty charges through accurate declarations in the shipping bill, supported by necessary documentation.

• Shipping bills:

Shipping bills must be filed electronically through ICEGATE or the ICES service center by the exporter. 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:

All required customs documentation, including commercial invoice, packing list, bill of lading, and certificates, should be accurately prepared and available in advance.

• Goods classification:

Correct classification of goods is essential for determining applicable duties and ensuring efficient customs clearance.

• Clear communication:

Clear communication and prompt responses are essential when providing goods information to customs authorities.

• Trusted customs broker or freight forwarder:

Customs agents and freight forwarders offer expert assistance in navigating the clearance process.

• 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.⁷

Conclusion

Understanding the intricacies of customs clearance is crucial for businesses engaged in international trade. By ensuring compliance with regulations and accurately managing documentation, businesses can streamline their import and export operations, reduce delays, and minimize costs. For businesses looking to expand their reach through e-commerce exports, programs like Amazon Global Selling provide valuable resources and support.

Amazon Global Selling: Easy e-commerce exports and hassle-free shipping

If you are a business owner and you want to sell your products to the world, Amazon Global Selling enables you to list and sell ‘Made in India’ products on 18 Amazon global marketplaces. As an e-commerce export program, Amazon Global Selling provides support and guidance at every step of your export journey, connecting you to Amazon’s Service Provider Network for tailored compliance, payments, and logistics support.

Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for Fulfillment by Amazon (FBA) and outsource order fulfillment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.

Frequently Asked Questions

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.
Updated on May 15, 2025

Sources:
1. https://stockarea.io/blogs/what-is-customs-clearance/
2. https://www.credlix.com/blogs/documents-required-for-import-export-customs-clearance
3. https://www.shiprocket.in/blog/documents-required-during-customs-clearance/
4. https://dov.gov.in/clearance-procedure
5. https://dov.gov.in/clearance-procedure
6. https://tax2win.in/guide/customs-duty-in-india
7. https://blog.pazago.com/post/custom-clearance-charges

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