Guide to Export & Import Customs Clearance Process in India
The export and import customs clearance process is an essential part of international trade. Whether you’re an exporter or importer, understanding how to navigate this process efficiently can save time, money, and ensure that your goods pass through customs smoothly. In this article, we’ll take a detailed look at how the clearance process works, the taxes involved, and the required documentation for both exporters and importers in India.
Key Regulatory Bodies in the Customs Clearance Process
In India, the Ministry of Finance oversees the country’s customs and excise regulations. Within the Ministry, the Central Board of Indirect Taxes and Customs (CBIC) is responsible for regulating customs duties, which are a significant revenue source for the government. The Indian Customs Act 1962 and the Indian Customs Tariff Act 1975 outline the rules and procedures for clearing goods, including what duties apply to specific products.
How the Customs Clearance Process Works for Exports
If you are exporting goods from India, here are the steps to follow for export customs clearance:
1. Obtain the Necessary Registrations and Licenses
To start exporting, you must have an Import Export Code (IEC) issued by the Directorate General of Foreign Trade (DGFT), and an Authorised Dealer Code (ADC), which is provided by your bank. Additionally, if you are part of an export promotion scheme, ensure your registration or license is up to date.
2. Self-Assessment and Duty Calculation
Before proceeding with the export of goods, you must assess the value of the goods and the applicable export duties. Check the HS (Harmonized System) Code for your product to classify it and find out the applicable duty.
3. Generating and Filing the Shipping Bill
The shipping bill is a vital document in the export customs clearance process. It includes key details about the exporter, buyer, the goods being exported, GST details, and more. Once prepared, the shipping bill must be filed with customs. This can be done manually or through the Electronic Data Interchange System (EDI), which allows for online filing via the ICEGATE portal.
4. Risk Management and Verification
After filing the shipping bill, a customs officer will verify the details and ensure that everything is correct. They will check whether the goods are exportable and that all necessary documentation has been submitted.
5. Examination and Loading of Goods
Once verified, the goods are examined, and a Let Export Order (LEO) is issued, allowing the goods to be loaded onto the ship. Afterward, the goods are ready for export.
The Import Customs Clearance Process in India
Now let’s explore the process of import customs clearance for goods arriving in India:
1. Filing the Import General Manifest (IGM)
When goods arrive in India, the shipping company files an Import General Manifest (IGM), which details all the goods arriving at the port.
2. Filing the Bill of Entry
The next step is to file a Bill of Entry, which includes essential information such as the goods’ description, value, applicable duties, and the method of transportation.
3. Assessment of Import Duties
The customs officer will review the Bill of Entry and verify the details. They will calculate the correct import duties and ensure that the goods comply with customs regulations.
4. Paying the Duties
Once the duties are assessed, the next step is paying the import duties. This can be done either manually or through the EDI system.
5. Goods Examination and Out-of-Charge
Once the duties are paid, the customs officer will examine the goods to ensure they meet all requirements. If everything is in order, the officer will issue an Out of Charge (OOC) order, allowing the goods to be released for further transportation to the buyer’s location.
Types of Duties and Taxes in Customs Clearance
In both import and export customs clearance, several types of duties and taxes may be applicable:
1. Basic Customs Duty (BCD)
This is the primary duty charged on imported goods.
2. Social Welfare Surcharge (SWS)
A surcharge applied to the Basic Customs Duty, which is typically a percentage of the BCD.
3. Integrated Goods and Services Tax (IGST)
The IGST applies to imported goods based on the value of the goods and is levied as part of the customs duties.
4. Compensation Cess
A cess charged on the goods as part of the tax regime, often added to the total import duty.
5. Additional Duties
In certain cases, additional duties such as Anti-Dumping Duty, Protective Duty, or Safeguard Duty can be imposed to protect domestic industries from unfair competition.
Final Steps for Customs Clearance
For import and export customs clearance, ensure that all the required documentation is filed correctly and that any duties or taxes are paid on time. Here are the final steps:
For Export: Once the Let Export Order (LEO) is issued, the goods are ready to be shipped.
For Import: Once the Out-of-Charge (OOC) order is given, you can take possession of your goods and proceed with the necessary distribution.
Conclusion: Streamlining Export and Import Customs Clearance
The export and import customs clearance process is complex but manageable with the right approach. By understanding the regulations, filing the correct documentation, and paying the appropriate duties, you can ensure your goods clear customs smoothly and efficiently. Whether you’re new to international trade or an experienced exporter or importer, following these steps will help you avoid delays and ensure your business operations run smoothly.
