In foreign trades, customs clearance is a compulsory process. However, many people may not be very clear about its content and fees. In this post, I will explain customs clearance in detail.
What is customs clearance?
Customs clearance refers to a series of clearing procedures for your goods to enter or leave a country. Every step should follow the customs regulations. And the process starts from submitting documents and declarations to the final release of goods.
Some people define customs clearance only in the importing county. Some people mean clearing goods in both import and export countries when speaking of customs clearance. Here we put customs clearance in the latter context.
Importance of customs clearance
1. It prevents the smuggling of goods.
2. It ensures that no illegal goods or something harmful to national security enters the country.
3. It needs to levy duties and taxes for protecting domestic companies’ competitiveness. And those fees are an important factor of revenue for the country.
What documents are needed for customs clearance?
Documents for import and export customs declaration
Customs Declaration Form
It provides information about the goods being shipped, including HS code, type, number, value, etc. Through the declaration form, customs authorities control what types of goods or items are for import or export. Your freight forwarders or customs brokers apply it.
Commercial Invoice
It is a document provided by the seller to the buyer and indicates information like product name, specification, quantity, packaging, unit price, value, terms of trade, etc., and other specific instructions. It also provides transaction amounts in detail and helps calculate tax.
Packing List
Your packing list needs to include information about the number of units, boxes, and any other available packaging information. And all of those details should match the commercial invoice and reflect the same parties involved in the transaction.
Sales of Contract
It is a document containing the details of the order with a description of the goods, price, terms of payment and delivery, and other clauses. It is essential for the customs officer to assess the value of goods and calculate tax.
Some documents for export customs declaration
Export License
It is a government document that authorizes or grants permission to conduct a specific export transaction. For example, in China, an export license is a must for export.
Shipping Order
It is a certificate signed by shipping companies to carriers that informs them of loading goods. After checking, customs officers will stamp the document. Then, they can load the cargo and ship it to the importing country.
Some documents for import clearance
Bill of Lading (BOL)
BOL is a receipt that shows the pick-up date, name of the vessel used for transport, details of the goods (number of units, weight, and dimensions), etc. Thus, you should ensure all information is accurate. Otherwise, it requires a second check for the new document and causes customs clearance delays.
Certificate of Origin (CO)
CO affirms the original countries or regions where the products are manufactured and processed. It provides all the details regarding the shipping, making inspection much quicker. And this certificate is a must if there is preferential import duty and you want to apply for it.
Warehouse Receipt
Customs officers check this receipt for which warehouse the goods are delivered.
The above documents are suitable for general cargo. Non-general cargo needs other certificates for customs clearance. For example, wooden products and packaging require a fumigation certificate. DG cargo should be shipped with MSDS.
Every country has different regulations and requires varied documents for customs clearance. You could directly ask your freight forwarder or customs brokers.
What is the customs clearance process？
Different countries may have different sets of rules when it comes to imports and exports. But the general process is similar.
Suppose you import products from China to the USA. In China customs, the export declaration needs 5 steps to complete.
1. Hand in documents needed and conduct declaration
In most cases, you could carry out a declaration and fill out the content online. Please notice the time of export declaration should be 24 hours earlier than loading goods, except for goods that have special permission from customs.
2. Documents inspection
China customs check all the submitted documents, with a focus on quantity, product name,
HS code, whether commodity inspection is conducted or not, etc. The information declared must be accurate and complete, otherwise, it may cause customs clearance delay.
3. Check the goods
All goods need checking by scanning. If customs officers find something wrong with the goods, they will conduct an inspection. But this probability is very low, around 5%.
4. Collect duties and taxes
Freight forwarders or customs brokers pay the duty and taxes as required.
5. Release cargo
When every step goes smoothly, customs will stamp the shipping order for admission. Then, freight forwarders take it to load goods and go shipping.
The clearance process is similar to that of customs declaration. But because of different policies in import countries, you should pay attention to some points. Take the US for example. Let’s have a look at its clearing process.
What should be noticed in US import customs clearance?
The key point is to buy customs bonds.
- Importers could purchase it, who can be individual or registered companies.
- It could also be purchased in the name of freight forwarders.
Please notice customs clearance goes in the name of the one who buys customs bonds. And he is also responsible for issues if the following troubles happen.
In addition, there are 2 ways to apply for a customs declaration.
- One is to apply online. Use Automated Broker Interface (ABI) system, and fill in the content needed there. ABI will inform you of permission or further check within 48 hours.
- The other is to hand in paper documents. Many precision electronic products and textiles require paper documents. In this condition, the release is always slow and needs 3 days to complete.
Besides, the US asks for AMS filing and ISF. You must file them 24 hours before cargo is laden in the port of departure, otherwise, your goods can’t be allowed to enter the US. And these materials could be handed in by your freight forwarders or customs brokers.
How much is the customs clearance fee？
Customs clearance fees mainly include the charges generated in the declaration process and costs at the port.
Charges in the process of declaration
It mainly includes the following 3 types.
Customs declaration fee
It is not decided by the value of goods, but charged by every customs declaration form with a certain amount. In China, it costs nearly $21 for an export declaration.
Value-added tax
It relates to cargo’s HS code and policies in different countries. For example, many countries in the EU set VAT rates of about 20%. And the US doesn’t levy VAT on imported goods.
Duties and taxes
Different countries have different tax rates. And taxes are also related to the type and value of cargo. Take the US for example. Any imported goods with a value of $800 or more are subject to import duties. In addition, the US has still levied additional taxes on imported goods from China. You can check the newest rate for your imported goods with some tools like HTS Search.
Besides, US customs require a Merchandise Processing Fee (MPF) and Harbor Maintenance Fee (HMF). If you import particular items like alcohol, tobacco, etc., you need to pay Federal excise tax.
Charges at the port
This includes harbor fees, inspection fees, and quarantine fees, etc. There are different charging standards in every port. And if your goods are randomly picked for customs inspection, it generates another inspection fee.
Your agent will pay for the cost generated in the clearance process in advance, and charge you for the actual amount.
How long does customs clearance take?
It relates to cargo types and means of transportation. For general cargo, if everything goes smoothly, it needs 2 or 3 days to complete the process by sea. And it is much quicker by express and air, nearly within 1 day.
But the whole clearing time will become longer if you import or export sensitive goods and DG cargo, or your goods are randomly picked by customs for inspection.
The end
Believe this article helps you understand more about customs clearance. If you have any questions, please comment below.
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