custom clearance

All trading companies and individuals try their best to grow their businesses beyond their country’s borders. Whenever a trader or a supplier decides to ship his goods internationally, the first thing that comes to mind is how he would tackle the customs clearance process. Everyone must undergo a customs clearance process when importing or exporting goods internationally.

However, you may have several questions popping into your mind related to customs clearance.

How does the customs clearance process take place? Do you have all the essential documents for clearing customs? What are the primary documents required for customs clearance? How can one pass the customs clearance process?

Don’t worry! This blog is a cure for all your worries and questions about customs clearance.

This blog involves all the crucial tips on leveraging the customs clearance process and making your international shipments trouble-free. You will also learn the ten excellent tips for making the customs clearance process more manageable and hassle-free.

So stay engaged intellectually and morally in discovering the best out of it.

Table of Contents

Chapter 1. Overview of Customs Clearance Process

Customs departments in every country can implement customs policies on international imports and exports. Each country follows its federal rules when formulating and implementing international trade policies. Therefore, the customs duty rates and trade policies differ from country to country.

The customs clearance process begins with the entry of a cargo vessel at the customs port or terminal of the recipient country when importing foreign goods. On the shipment’s arrival, the customs officials warehouse it in a specified area for customs clearance. They release the load after verifying documents and collecting customs duties.

1) What is Customs Clearance?

Customs Clearance

Customs clearance is a process that every shipment must undergo when moving inside or outside the country. The governing body or customs officials perform this process.

It may also be referred to as a permission letter or certificate that a customs officer issues to the shippers allowing them to take their goods into the importing country.

When a shipment undergoes customs clearance, the shipper or freight forwarder must submit various import or export documents. They also need to pay customs taxes, VAT, and other inspection costs to get permission to import goods out of the country or export products into the country.

2) How Long Does it Take to Have Customs Cleared?

time ticking

The time for the completion of customs clearance varies according to the kind of goods included in the shipment. Customs officers follow a particular pathway for performing customs clearance.

They may complete the process in a few minutes or hours if the consignment has all the necessary documents required by the customs officials in the receiving country.

However, customs clearance may take a few days or weeks if the mandatory documents still need to be included. The customs officers may take more time to conduct customs clearance if they suspect something non-permissible in the goods. They may start inspecting each item properly, further delaying the recipient’s shipment.

Moreover, suppose an importer or a freight forwarding company has yet to pay the import duty. In that case, the shipment will remain stuck at the terminal until they pay the import taxes. Besides that, they will also stop the load if any of the necessary certificates are found missing or incomplete.

3) Can one Avoid Paying Customs Fees?

A Customs fee is unavoidable for all international shipments. Every shipper must pay the customs fee before officially entering a foreign territory. Each country imposes customs charges that the importers must pay for customs clearance.

However, some importers also hide the actual worth of goods to lower taxes and taxes. It is entirely illegal, and such wrongdoers may undergo severe punishments. Such mischievous importers may suffer heavy fines and years of imprisonment.

Although the importers can’t avoid paying customs duty, they can reduce the total customs fee and pay lower import taxes through duty relief schemes. Following duty relief schemes allows European importers to get full or partial customs tax relief legally.

a) Temporary Admission

There will be total or partial relief from import duty if you import goods from a foreign country into the UK for a short period. You may import products temporarily for short-term use, such as products for showcasing at exhibitions or trade fairs.

b) Inward Processing

Inward processing is also a customs duty relief procedure. It helps companies to get VAT relief when importing goods into the EU for processing. After processing, the products are exported outside or inside the European Union.

c) Outward Processing

Outward processing is another customs tax relief process that allows goods from the customs territory of the Union to be exported to non-EU countries. It merely applies to the products that need to go through repairing or processing procedures outside the EU.

The processed products are then reimported into the UK with total or partial customs duty relief.

d) Bonded Warehousing

Bonded warehousing refers to storing dutiable goods at bonded warehouses or bonds with the total customs duty exemption. The products kept at the bonded warehouses remain held until the customs fee is paid and they are ready to export to another country.

e) Tariff Quota

tariff

Tariff quotas refer to the limited quantities of particular items or goods you can import from a foreign country at a lower customs duty than the standard customs tax rate. You can only import those products in a tariff quota you cannot find in your country (such as raw materials or products for finishing)

4) How can Customs Fees be Paid?

Customs Fees Paid

The importers receive an invoice containing the details of customs charges when their products arrive at the terminal of the recipient country. They will have to pay the customs duty mentioned on the invoices sent to them. Otherwise, the customs official will not allow their shipment to move into the country.

Moreover, the Incoterm (international commercial terms) agreed between the importer and supplier decides whether the importer is liable to pay the customs duty or the supplier should pay it.

If the invoice reads the Incoterm as DDU (Delivered Duty Unpaid), then the importer is liable to pay the customs duty. On the contrary, if DDP (Delivered Duty Paid) has been agreed upon between the importer and supplier, then the seller or exporter is responsible for paying the customs fees.

All importers and exporters want to avoid the headache of interacting with customs officers and paying duties or taxes for customs clearance. Therefore, they hire customs brokers or freight forwarders to deal with this trouble and pay the customs fee on their behalf.

This way, they have their importing or exporting shipments done without hassle.

You might also like to read: Import Documents: China Import Requirements and Documentation

Chapter 2. What is the Process of Customs Clearance?

Process of Customs Clearance

We all know that every shipment and cargo vessel has to undergo a customs clearance process when moving into or out of a country for import or export.

But what is the customs clearance process, and how does it happen?

What steps are involved in the customs clearance process?

Don’t bother yourself. We have made it easier and listed all the necessary steps in the customs clearance process.

These are the basic steps involved in the customs clearance process;

1) The Arrival of Import or Export Cargo at the Terminals.

The customs clearance process starts when a cargo vessel or plane arrives at the recipient country’s assigned terminal or customs port. When a shipment reaches the port or terminal, the customs authorities issue an IGM (Import General Manifest).

Import General Manifest is a legal document containing the details of shipment goods that have arrived at the port in the importing country. Freight forwarders or the carrier of goods are responsible for filling those documents at the customs port.

The importers or freight forwarders need to file and submit IGM to the customs authorities within 24 hours of the shipment’s arrival at the location of customs. However, they can also fill and deliver it before a shipment’s entry at the importing country’s customs ports.

Import General Manifest notifies the customs authorities about the goods or imported accessories a shipment includes.

The customs officers then prepare the entry certificates and perform duty calculations according to the type of imported materials in the cargo vessel.

If you are exporting goods to a foreign country, you must fill out and submit an Export Declaration of Goods (PEB) to the customs officials before your shipment reaches the terminal for exporting.

2) Document Verification

Document Verification

Document verification is the second step in the customs clearance process. The customs officers check all the necessary documents required for importing goods to a foreign country or shipping products from a foreign country.

Document verification occurs at the customs ports when a shipment arrives for export or import purposes.

Customs authorities check all the mandatory documents and certificates for validity. The customs clearance proceeds further when the customs officers confirm the originality and validity of the documents required for international shipping.

On the contrary, they stop the shipment at the port if the certificates are incomplete or the carriers fail to provide the necessary documents. Therefore, you must prepare and hold every document carefully to avoid trouble at the customs port.

3) Tax and Duty Calculation

Tax and Duty Calculation

Tax and duty calculations are compulsory for every shipment moving internationally. The amount of customs tax or duty varies in every country as they have distinct trade rules and different tariff rates.

Above all, the customs authorities decide the tax and duty percentage according to your shipment’s total worth and the type of goods it contains.

However, if you want to avoid stuffing your head with these customs calculations, you can hire customs brokers. Customs brokers or freight forwarders can help you in this regard as they are fully aware of this type of dealings.

They can pay customs duties and import taxes on your behalf.

Furthermore, the shipping mode and the choice of incoterms are other factors that decide how much and on whom tax should be levied.

4) Selection of Incoterms and Payment of Customs Duty

Incoterms

Customs officials impose customs tax on you or your supplier by checking the incoterm that applies to your shipment. You can choose either of the incoterms, DDU or DDP.

Delivered Duty Paid (DDP) means your supplier has paid the required customs taxes in advance. Delivered Duty Unpaid (DDU) means the customs duty still needs to be paid by you.

When the customs officers confirm that the customs duty has been paid, they mark DDP on your shipment. Otherwise, they mark DDU if the customs fee still needs to be paid.

The DDU marked on your shipment indicates that the customs duty is unpaid. The customs authorities will transfer your load to an independent customs broker if the customs fee is pending.

You will only be liable to return your shipment to your address until you pay the pending import duty or customs tax. They will also charge extra bucks for the shipment’s inspection, storage, handling, and disbursement.

5) Release of Shipment

When the customs officers have done verifying the documents and customs tax collection, they release the shipment to its recipient’s address.

It means you can pass the customs clearance earlier if you have all the essential documents and have paid customs taxes.

Suggested Reading: Shipping Documents: 10 Most Important Documents 

Chapter 3. 10 Tips on Making the Customs Clearance Process Easier

We all know clearing the customs procedures is not a piece of cake during international imports and exports. It is one of the most tiring and daunting activities for traders. They must face various trade policies and document verification processes in different countries.

Getting all the paperwork ready and evaluating the customs duty rates in a particular country is also burdensome work.

But you do not need to worry.

We have brought ten excellent tips for you that can help you get your package custom-cleared conveniently. Follow and apply these essential tips to have your shipment pass customs clearance in no time.

1) Hire a Reliable Freight Forwarding Company

Freight Forwarding

A freight forwarding company or a carrier is the most trustworthy fellow you can hire when starting your trading business beyond borders. The freight forwarders or carriers are experienced persons or agents with proper customs clearance knowledge.

They can handle your international shipments more accurately and prepare all the legal documents for paying the customs duty on your behalf.

Hiring a reliable and experienced freight forwarder is a priceless gift you can give yourself as an international exporter or importer. They have every step of the customs clearance procedure at their fingertips.

Besides this, you can also choose a third-party customs broker or CHA (Customs House Agent). A third-party CHA can help you with export clearance at the port of origin and import clearance at the arrival port of the recipient country.

So, do you want to import high-quality goods from China?

Well, EJET can help. We are a native Chinese sourcing company and have helped 2000+ businesses with the hassle-free product purchasing process. What’s best? We will interact with customs officials, submit essential documents, pay customs taxes, and get your shipment customs cleared without troubling you.

Hence, letting EJET handles your exports is one of the best ways to make the customs clearance process effortless. You can contact our sourcing consultant Sunny Qiu to enjoy a hassle-free international trading experience.

sourcing consultant

2) Check for Import and Export Restrictions

Some countries impose a ban or restrictions on the export or import of certain products. Therefore, before allowing a freight forwarder or carrier company to take your goods to a foreign country, you must check whether the goods are eligible to export from your country and permitted to enter the importing country.

You can consult the official list of banned goods in a country before booking your shipment. It will allow you to consider the restricted items and ensure your shipment does not include those prohibited goods.

However, you can seek written permission to ship the restricted items under certain conditions. Otherwise, customs officers can seize your cargo if they find impermissible goods.

Countries impose import and export restrictions on certain products for the following reasons;

a) Age Restrictions

Restrictions

Some countries impose age restrictions on importing or exporting some old-model and antique items. For example, they do not allow traders to import or export 50-year-old vehicles or 100-year-old paintings.

However, they may allow the trade of such goods on specific conditions by levying more customs duty and import tax.

b) Packaging Restrictions

Many countries have set their standard packaging requirements. They want traders to follow those packaging standards for importing or exporting goods into or out of that country.

Their shipment may get stuck at the customs ports if they fail to meet those packaging requirements.

c) Quantity Restrictions

Similarly, a few countries have formulated specific trade laws that only allow their traders to import or export goods up to a particular quantity. They have set a specific limit on the number of items a trader can import or export within a certain period.

For example, some countries maintain quantity restrictions on the trade of nuclear materials, medicinal drugs, and weapons.

3) Verify Your Compliance with Trade Agreements

Compliance

Verifying your compliance and conformity with trade agreements is another crucial step that can make the custom clearance process easier for you.

The trade agreement with a country helps you figure out and reduce the trade restrictions and customs taxes imposed on the export or import of goods.

Certain trade agreements can benefit you by lowering tariffs and making customs clearance convenient.

a) Fair Trade Agreements

Countries sign Free Trade Agreements with other countries to boost trade between them. Two or more countries reduce trade barriers by allowing more significant market access to the traders under Fair Trade Agreements. Such agreements also offer reduced tariffs and customs fees.

You can also take advantage of such agreements if your goods adhere to the FTA requirements.

b) Anti-Dumping Duties

Some countries impose anti-dumping duties on importing foreign goods with low prices than the fair market value of such items in their manufacturing.

Foreign companies dump the products at reduced prices to destroy the local markets of importing countries. Therefore, the importing countries impose heavy anti-dumping duties on such items to protect their local market sales.

You should consult your customs broker to know whether any anti-dumping duty applies to your goods. If it happens, you should price your goods accordingly to avoid the anti-dumping duties.

Also read on: How to Start Import Business With China?

c) Countervailing Duties.

Countervailing duties are also customs duties that apply to merchandise imports. Many countries impose countervailing or anti-subsidy duties to counterbalance the subsidies that the exporters receive from their governments.

You can avoid anti-subsidy duties by checking whether they apply to your exported goods.

4) Verify Trademarks and Copyrights

Trademarks and Copyrights

You must also verify trademarks and copyrights for your goods before exporting them to a foreign country. Protection of your Intellectual Property or IP in exports is a key to getting your products custom-cleared without any trouble.

Protection of IP in exports, such as copyright, patents, and trademarks, ensures the originality of your items shipped to an importing country. So, you have to decide on a unique brand and copyrights for your goods not already selling in the importing country.

5) Keep Your Paperwork Complete and Up-to-Date

a person is signing a paper

When the customs process starts, the customs officers demand some necessary documents. They may seize or delay your shipment if your customs records and certificates are incomplete.

Your shipment will remain seized at the customs ports until you provide all the mandatory documents and invoices.

Therefore, you must arrange and hand over all the legal documents to your customs broker so that your cargo vessel passes the customs process without delay.

6) Understand Your Shipment Route to Arrange the Required Customs Documents

There is a dire need to understand and keep track of the trade routes to make the customs clearance process easier. Being a trader, you must know the cargo routes and countries your goods will pass.

It will help you understand the legal documents and customs requirements needed in those countries. Map out the whole shipment route before importing or exporting goods and prepare all the required essential certificates and customs invoices along the way.

7) Acknowledge International Trade Laws

two persons are shaking hands

Remember that the trading market is quite flexible, and its laws and rules change frequently. Although keeping track of constantly changing trade rules is difficult, you can stay aware of these laws by keeping yourself active in the export-import market.

You must be familiar with the ongoing trading trends and international laws. It will help you fulfill the shipment requirements and arrange documents according to the destination countries’ upgraded trade laws.

It will ensure the smooth shipment of your packages through international borders without being stopped and seized by customs authorities.

8) Comply with Packing Requirements

a person is Packing a parcel

Choosing the suitable packaging material is essential for safely delivering your goods to the recipient’s country or importing goods from an exporting country. Many countries have specific packing requirements for particular items and demand that traders comply with those packing conditions.

Some countries also insist on using timber and straw as packing materials.

So, you also need to know about the packing requirements observed in the land of origin or importing country.

9) Attach the Required Documents to Your Shipment in an Easy-to-Approach Manner

All the paperwork and legal documents for international trading must be easily accessible to customs officers. Attaching the required documents in an easy-to-approach manner will save time and make customs clearance easier.

Otherwise, they will have to search the whole cargo to find the documents, ultimately wasting time and delaying the shipment.

10) Perform Pre-shipment Inspections

Pre-shipment Inspections

Performing a pre-shipment inspection is also one way of protecting your package from getting seized and delayed at the location of the customs in the importing countries.

Pre-shipment review is mandatory to ensure that your goods adhere to the destination country’s customs requirements and quality standards.

It also enables you to ensure that everything is in appropriate condition and order as per the importers’ requirements.

You can check for the following basic requirements before your container leaves the exporting country.

  • Packaging requirements
  • Health requirements
  • Labeling requirements
  • Quality requirements
  • Document requirements

Chapter 4. What are the Main Documents Required for International Shipping?

Documents

There are multiple documents required for international shipping. You must have all those requirements ready and complete. Different logistic companies and shipment carriers also need these documents to check the legality of imported or exported goods.

Following are the primary documents you need to import or export goods internationally;

1) Export and Import License

import export license

An export and import license is an official legal document, and an international trader must have this document.

The government issues this license to reliable and certified importers or exporters. Exporters require an export license for exporting specific products. However, it may be optional in some countries.

2) Pro Forma Invoice

 Invoice

Pro forma invoices refer to the documents that a seller sends to its buyer on confirmation of a deal (order placement) between them. A Pro forma invoice also works as an agreement between parties involved in the transaction.

The customs officers find the total value of goods in the shipment through the information given in the pro forma invoice. They also use it to determine the customs duty imposed on the products.

3) Certificate of Origin

Certificate of Origin

A certificate of origin is also a legal document indicating the country where the goods have been manufactured. It allows the customs agents to determine the country from where the shipment has arrived.

Many treaty agreements also require this certificate to check the eligibility of goods for international trading.

The customs authorities determine the origin country and ensure they adhere to all free trade agreements.

4) Export Packing List

The export packing list is a document that includes a detailed list of the items present in the shipment. The document carries all essential details related to importing or exporting products.

It includes the weight, packaging type, dimensions, material type, and safety measures of the goods.

Freight forwarders use this packing list to generate the bill of lading. It can also be used to resolve issues between shippers and carriers.

5) Commercial Invoice

A commercial invoice is another legal document that confirms the trading deal between the sellers and buyers. It holds all the essential sales details, order placements, and transactions between the exporter and importer. It is the actual proof of sales and transactions between two parties.

A commercial invoice also includes the shipping terms such as terms of sales of goods, package marks, mode of shipment, incoterm decided between vendor and buyer, freight insurance details, etc.

6) Letter of Credit

Letter of Credit

A letter of credit is a legal document from the bank guaranteeing the payment of a particular amount in a business transaction. A creditworthy bank or a financial institution issues a letter of credit, also known as banker commercial credit.

A letter of credit reads that the bank or a particular financial institute will pay the remaining charges if the buyer does not pay.

It has become a secured mode of international business transactions with consistently varying foreign trade rules and regulations.

7) Bill of Lading

Bill of Lading

A bill of lading is an official document issued by the freight forwarding company or a certified carrier agency. It is a legally binding document that contains all the required shipment details. It is also evidence of a contract between the trader and the carrier company.

An authorized representative of the freight forwarding company signs this bill confirming the receipt of goods for shipment. The most crucial shipping document must be attached to every shipment going through international routes.

8) Airway Bill

An airway bill is a type of bill of lading. It is the official contract between the shipper and an airline carrier. It is also known as an air consignment note.

The official representative of international shipping issues airway bills as a receipt and evidence of the contract of carriage between the trader and the airline carrier. It is a non-negotiable shipping bill that you cannot transfer to a third-party consignee.

Chapter 5. FAQs about Customs Clearance

FAQs

1) Is customs clearance necessary for every shipment?

Custom clearance is mandatory if you intend to ship commercial goods internationally. The process is made compulsory for conducting a complete inspection of goods before they enter a country. It ensures that no illegal or banned products enter a country or state.

Above all, customs clearance also allows the government to collect taxes and duties for liable imported items.

2) What is the turnaround time for my package to pass customs?

The whole customs clearance process follows a specific pattern and order to complete. We cannot accurately assume how long a container will take to clear customs. The turnaround time for a package depends on the nature and type of items it contains.

Some goods may also require additional certification and inspection for customs clearance. Generally, a shipment takes less than 24 hours to pass customs clearance. However, depending on your package’s variety of products, it may take several days.

3) Can my delivery get stuck in customs?

Yes, there are some chances that your delivery gets stuck or delayed in the customs clearance process. Shipments can get stuck for multiple reasons, including unpaid or pending taxes and incomplete documentation. The customs officers can also stop and hold your cargo vessel if it includes prohibited goods.

You should immediately contact your freight forwarding company or agent if your delivery gets stuck in customs clearance. Freight forwarders will handle the matter and make appropriate arrangements for customs clearance.

4) How long will customs keep my shipment?

Customs officers thoroughly examine documents and customs duty to decide whether a shipment abides by all customs rules and regulations. Moreover, the holding period for a consignment in customs warehouses depends on why it got stuck there.

For example, if customs officers have stopped your package at the terminal due to unpaid taxes, it will remain held until you pay the required balance or customs duty.

5) Do I have to pay import taxes when shipping goods from abroad?

Import tax is one of the integral aspects of customs clearance when importing goods from a foreign country. An international shipment always goes through the import duties clearance process before it enters an importing country. The importing country imposes customs duty according to the total value of goods in the shipment. Governments have set different percentages to impose import taxes on the goods’ actual worth.

Your freight forwarding agent or customs broker deals with import taxes on your behalf when shipping goods from abroad.

Conclusion

The Customs clearance process is exceptionally challenging as it requires various documentation and legal shipment records. But, with the growth and progress of the e-commerce industry, international shipping and foreign trade have become more convenient and worry-free.

A trustworthy freight forwarding company can also help you import Chinese goods with reduced customs clearance duties and restrictions. The blog has covered all the important details a beginner trader desires to see before starting his export or import business internationally.

However, you can visit ejet.com to consult experienced and qualified freight forwarders who will help you grow your trading business by taking your shipment safely and soundly through the customs ports of the destination countries.