Customs Clearance: Understanding the Process

Each country has its entry and exit points where people and cargo move in and out. The Customs department of each country is the one liable for monitoring the goods that come in and go out of their ports.

From a buyer’s perspective, goods brought in from another country are called imports, while those sold to an overseas customer are called exports. Imports and exports are essentially the transfer of goods between different countries.

Customs Department

Imports and exports are monitored by laws enforced by a country’s Customs department, following government policies. Different countries have organizations that formulate guidelines and rules for imports and exports. Generally, all those countries whose ports are connected to international destinations will have customs offices to carry out these functions. A country’s customs department is empowered to confiscate goods, dispose of them as necessary, or make arrests.

Import and Export

Different countries may have different set of rules when it comes to imports and exports. All the goods that are imported or exported must be declared to the customs. To import goods, the specified customs duty must be paid to the customs department to obtain the release of the goods. Until this payment is made and the customs release goods, it is held in storage by the customs department. This storage area is known as the Customs Bonded area. Goods can be exported only after making related payments to the customs department.

The importer or exporter may carry out all these formalities or appoint a government-licensed clearing agent or a freight forwarder (also known as a Customs Broker). Who then represents the party importing the goods and acts on its behalf. Similarly, the freight forwarder acts on behalf of the exporter to ensure that goods are exported on time, following government rules and regulations.

Customs Clearance

Typically, customs clearance is getting the imported goods customs-cleared for delivery to the importer’s premises for sale or reprocessing. Depending on the nature of goods, some may have special requirements.

The Process:

• preparing and submitting documents required for customs clearance

• arranging an inspection

• paying customs duty

• collating all the documents to show that the goods have been cleared correctly following customs rules and regulations

Only by then, the imported goods can be cleared from the port or customs-bonded warehouse to the customer’s premises.

Documents Required for Customs Clearance

Typically, the following documents are required to clear a sea freight consignment:

• Purchase order of the buyer

• Commercial invoice issued by the seller

• Packing list

• Bill of lading or seaway bill issued by the shipping line transporting cargo or its representative

• Certificate of Origin issued by the Chamber of Commerce of a country, or a body authorized by the government

• Insurance certificate

• Bill of Entry prepared by the clearing agent or the buyer

• Importer’s license of the buyer

Understanding Documents

Most of the above documents are commonly used in trading – exports, and imports and exchanged between the buyer and seller. It may be mandated by the relevant authorities, too. So you should know what they are and what they are for.

Bill of Lading or Seaway Bill

This is the contract of carriage between the exporter of goods (or the seller) and the shipping company transporting the goods. Most bills of lading are negotiable contracts. However, seaway bills are non-negotiable and deliverable only to a specific party. These legal documents are proof of ownership of the cargo.

Certificate of Origin

A document that certifies the country where the goods meant for export are made.

Bill of Entry

A bill of entry for an import consignment will contain all the information about the goods. It is prepared by the clearing agent or the importer and has essential details of the import, such as:

• Name and address of the importer

• Import license number

• The clearing agent’s registration code

• Country of origin of the goods

• Details of the vessel carrying the consignment

• Customs duty and other taxes paid by the clearing agent etc.

At Image International Freight we can handle all your customs clearance requirements. Please call +61 2 9773 1378 or email us today sales@imageinternational.com.au to discuss your customs clearance needs or obtain a quote online here!