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written by | May 2, 2022

What is Customs Clearance Procedure in India?

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Every shipment that crosses the border of goods has to clear customs before being shipped or imported. However, getting through the customs clearance procedure requires an additional preparation of documents and familiarity with the regulations and rules in India.

Although the additional documentation and formal inspections could appear daunting, the customs clearance process to ship freight isn't as complex as you think.

This complete guide to the customs clearance procedure can assist you in understanding the procedure and help you complete your next international shipping with security in mind.

Today, we'll understand customs clearance meaning, highlight the Indian custom clearance process and bring you all the vital information.

Did you know?

When you don't pay the customs duty taxes for the imported merchandise, the authorities will confiscate the goods you import, and your profits are stuck in limbo. Also, you may get advice from "So-called experts" on how to deduct the customs duty. Always cross-check this advice because you may invite legal troubles if you blindly follow.

Also Read: Top Performing Import-Export Business Ideas In India

What Is a Custom Clearance Agent?

Custom clearance agents, often known as customs brokers, are customs clearing experts. Their job is to communicate directly with government, port, and airport officials to guarantee that your goods meet customs requirements. Their major duty as a service provider is to assist importers in navigating a complex regulatory structure in order to ensure that their goods are 'customs clear.' Customs valuation, Customs declaration, International trade consulting, Tariff classification, Handle all automatic customs clearance, Freight management, and Import and export purchase order management are all duties that the customs clearing agency will assist you with.

What Are the Best Ways to Pay Customs Clearance Charges?

Most exporters and importers have the services of a freight forwarder customs broker who pays the customs fees, thus saving the hassle of paying the cost themselves. 

If the importer is responsible for their shipment, they'll usually receive an invoice with the details of the charges when you bring the goods into the country. You will have to pay the invoice before releasing the items for transportation.

In certain situations, the importer will not be accountable for import costs. It depends on which Incoterm the importer and the supplier (exporter) agree upon.

Based on the customs clearance procedure, a freight broker or logistics partner may be able to help in applying or provide advice regarding whether it's worth applying. Next, learn about a time when customs clearance is necessary.

When is Customs Clearance Necessary?

Customs clearance is mandatory for all international deliveries of commercial goods. However, the procedure is more efficient when you have the essential documentation and employ an intermediary to coordinate, calculate and pay the fees and taxes.

The simplest techniques to streamline customs processes are to partner with a broker that can handle tax & duty payments in advance and pay a set customs clearance cost. Many customs clearance services are available today, ready to bring you ease.

What Is Customs Clearance Procedure?

Custom Clearing Process starts once the exporter meets all requirements to export and receives the shipping request to reserve the space on the ship. Below are the steps in the Indian custom clearing process to facilitate the export of goods to India:

1). Generation of Shipping Bill

After receiving the papers, the customs official checks the documents based on the physical amount of products received. The customs officer creates the shipping bill to export goods from India and provides an exact copy for the dock appraiser.

2). Arrival of Goods at the Port

When the goods arrive at the port, the forwarding and clearing agent sends the paperwork to the Custom House for further procedure. The checklist of documents includes:

  • Letter of credit
  • Packing list
  • Invoice 
  • Certificate of origin 
  • Other documents that are pertinent to the shipment. 

Furthermore, the shipping invoice must note MEIS benefits and duty drawbacks (if any) on this particular product. ICEGATE receives the checklist.

3). Loading of Goods

The forwarding and clearing agent sends the "Let Export" in the bill of the steamer agent. It is needed to do cargo loading in the officer's direction, responsible for the prevention. 

When the officer in charge of prevention is happy with the cargo, he issues a "Shipped on Board" confirmation on the invoice. In addition, the vessel commander gives a "Mate receipt," which confirms the shipment of goods. Custom clearing is about to complete at this point.

4). Examination of Goods

The dock appraiser inspects the items as per the exam order. If the authorities discover goods conforming to the declarations in the document, they produce a 'Let Export' order. In case of any contradiction in the request, the authorities return the items to the department responsible for the export.

In other cases, the goods are sent to the preventive superintendent before being shipped under his supervision. Also, there is a delay in the customs clearance process for export products from India in this scenario.

Also Read: All About Import-Export Code (IEC) Number

5). Duty Drawback Claim

The shipping bill allows the exporter to claim a drawback on duty for the exports. The drawback branch office handles the drawback electronically after the exporter has verified the shipment invoice and drawback claim at the counter for queries.

The branch office will credit the claim to the exporter's account following the successful completion of the process. In the end, the customs clearance process of goods is over.

6). Export General Manifest

The shipping agents must forward the general export manifest to the Customs Department, both manually and electronically, within seven days from the vessel's launching.

If you feel like starting your own exporting business, we suggest writing a business plan first.

Can I Get Rid of Customs Clearance Charges?

It is illegal to declare products under lesser commodity codes or fraudulently declare their value to reduce taxes and duties. However, there are several options for relief from duty that permit importers to pay a lower or, in some cases, no customs duties. The viability of the duty relief scheme is contingent on several factors like the type of product, the intent behind the use of the product and the place of the product's origin.

The most straightforward method to determine whether you are eligible for exclusion is to examine the code of your commodities by visiting the Government Trade Tariff website. The appropriate product page will explain import-related measures and restrictions, and exemptions from duty for certain countries.

What Products Require a Customs Clearance Permit?

Most products don't require an import licence or export licence. The ones that need one are typically risky or require more strict regulation. They can include, but you cannot restrict them to:

  • Nuclear substances
  • Firearms and firearms
  • Drugs
  • Fur
  • Iron and steel (from specific countries)
  • Livestock
  • Milk, poultry, meat and other food items
  • Blood
  • Endangered species

How to Avoid Custom Clearance Delays?

The best way to prevent delays in the clearing is to send complete and precise documents to the trucking company to let them collaborate and work with the Customs Broker, and then provide your paperwork for clearance by government officials. 

Professionally trained shipping companies and brokers can help ensure that the documents you submit are accurate and contain proper company information, inventory and cargo value. This will ensure that the correct taxes and duties you receive and authorities don't flag your shipment.

Conclusion

Make sure you pack your package correctly. We reiterate that you must load your package correctly. In simple terms, a perfectly sealed package will speed up the customs clearance

Alongside faster customs clearance, if you properly pack the cargo, that has a lower chance of being damaged during transit. When it comes to the port of entry, it will be simpler to sort the cargo when everything is in the right position. Also, Khatabook can help you a lot if you lack investment by providing you with gold loans with easy installations.
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: How can I do customs clearance myself?

Ans:

Custom declarations are necessary if you trade goods worldwide, and it also includes UK-EU imports and exports. Most importantly, making a declaration yourself is also possible. Also, you can appoint a person to work for you.

Q: What primary law regulates customs in India?

Ans:

The primary law governing the customs and trade in India is the Customs Act 1962. It will govern the entry/exit of distinctive categories of vessels, passengers, aircraft, goods, etc., into the country. The Act will extend to the entire of India.

Q: Can custom clearance charges be refunded?

Ans:

You can't recover import duty. However, businesses registered with VAT can claim VAT refunds on their entire imports, and it can make significant savings.

Q: How much time does custom clearance processing take?

Ans:

The customs clearance procedure typically happens within hours or minutes, but it could take weeks or days when documentation isn't available, or the product requires inspection. The items are held until you supply the needed documentation or customs officers have completed their inspections.

Q: Is hiring a custom clearance agent helpful?

Ans:

Certainly, yes. Customs clearance can be frustrating sometimes, especially for those who do it for the first time. A custom house agent looks after all the transactions for the import/export of goods. The expert can check whether all your documents are up to date, take care of the legalities, give professional advice and help ship your goods on time.

Q: What is customs clearance?

Ans:

The customs clearance process is compulsory for all goods entering or leaving a nation. It requires submission of various import and export documentation, in addition to the VAT, payment of duty and a few other charges like storage or testing by customs officers.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.