What Are Customs Clearance Requirements?

Source: DHgate, Tag: Dropshipping

Learn more about customer customs clearance and the compulsory process for any goods entering or leaving a country.

If your business operates at an international level, you must be conversant with customs clearance. Suppose you are into importation and exportation of goods. In that case, you will know that custom plays an essential role in cross-border trade.
The thought of going through customs clearance can be daunting for business owners, especially those that are trying to test international trade. The experience is new and comes with different challenges for beginners due to the numerous requirements. In recent times, international trade has been like a new plant that has been discovered. While understanding the market, knowing the custom clearance requirements is most for everyone going into a global business.
This is where we make the work a lot easier for you. This article will provide you with the information you need and the necessary requirements to import and export goods without any challenges. Also, we will be providing you with frequently asked questions from others about the customs clearance.

What is customs clearance?
Customs clearance is a process of obtaining permission from a country's affairs of state through its customs authority to export goods from its government or import them to its territory. This process is essential as it is always required before products can be transported internationally. If cargo is cleared, the person shipping provides documentation to confirm that customs duties were paid; after confirming, the cargo can then be processed.
Even for an expert in exporting and importing trade, there are times when this process can be difficult owing to different factors as requirements can be country-specific. But the first and significant breakthrough is knowing and having the things needed for easy transporting of products across the world.
Is customs clearance mandatory for import and export traders?
Yes. Custom clearance is mandatory and necessary for global trade.
Now that you know that customs clearance is essential for international trade let's talk about the documents needed.
Customs Clearance Requirements
As said earlier, customs clearance requirements are country-specific. Still, this article aims to provide you with the generally or globally essential documents that customs authorities may likely demand from shippers.
1. Commercial Invoice
The commercial invoice contains the important aspect of the entire export history such as transactions. The seller or manufacturer of the goods provides a commercial invoice to the buyer, as the invoice is a legal paper that serves as prove of the sale or transaction that occur between the seller and the buyer. As a buyer who is importing products, customs officers use the invoice document to verify the state of the goods such as its originality, and the worth of the duties and taxes to be paid. Other information that may be required and included in the commercial invoices are; the date the invoice was issued, cost of the goods, and sellers and buyers information,
Aside from the commercial invoice, there are the proforma invoices which are similar in function to invoice document. Depending on the country and region, instead of using a commercial invoice, the customs authorities can use the proforma invoices to analyze both import duties and taxes instead.
2. Shipping List
Shipping list also known as packing list provides detailed information about the goods in the shipment. Information such as the total weight of the product, and the size of the goods the standard units are provided in the packing list. Aside from the list revealing the entire contents of the shipment, it also helps with the shipping process as the customs brokers need it for clearance. Additionally, freight forwarders also need the information in the packing list to reserve with a carrier and supply the bill of lading. These are details that may also appear on the shipping lists.

• • Complete information about the supplier, buyer, and shipper

  • The date of shipment

  • Mode of transport

  • Crucial information about the carrier

  • Description of the products

  • The way it was packaged, such as a crate, box, or carton

  • The quantities

  • The dimensions

  • The total net and gross weights

  • The package marks such as container and seal numbers

  • Invoice numbers

• 3. Certificates of Origin
  Some countries ask for a certificate of origin to know the country where the goods originated. This certificate shows the country where the products were made from. It shows information about the products, destination, and country of origin. The credentials of origin usually need to be signed by a partially official organization, such as a chamber of commerce that charges you a fee to stamp and signs your certificate. But it is suggested that the exporter confirms from the buyer or a freight forwarder if the certificate of origin is mandatory. These certificates help identify if your products are eligible for import, subject to duties and entitled to privileges.
  4. Letter of credit or other payment terms
  A letter of credit is a letter from a bank stating that the supplier will receive the payment without delay in the right amount. If the supplier doesn't get paid, the bank becomes responsible for covering the precise amount or the remaining amount of the transaction. Hence, this protects the seller from incurring any debts. Although the letters of credit are still very used, other obtainable payment systems are;

  • Advance payment: the manufacturer or exporter receives the payment through a wire transfer or credit card before the goods are delivered.

  • Open account: Shipments are transported and delivered before the scheduled time for payment. This method works for buyers but is risky for shippers.

  • Documentary collection: This system allows a bank in the importer's country to act on behalf of the shipper and receive the payment for the products.

• 5. Bill of lading
  This is the first transportation document requested for international transporting made for exporting. It is a legal document provided by a carrier to a shipper. It provides information such as the type of goods purchased, quantity, and country of destination of the good. The bill of lading acts as a contract between the carrier and shipper. It is a document of subject and can be passed on by approval. Whatever shipping option you are using, the document must follow the shipped products. A bill of lading is usually used for products transported through the sea. Other shipping options such as air cargo transport and airway bill are commonly used, but the document provides the same function.
  6. Other documents
  Sometimes, customs officials ask for other documents to complete the process. These are some of the requested documents.

  • International trading licenses

  • Inspection certificates

  • Risky goods declarations

  • Permits

Your customs broker informs you ahead if the other documents are needed and will also provide more guidance if necessary.
Another perceived fear about customs clearance fees, especially for beginners. New global traders should know that there is two important part of the customs cost. The first part is the customs clearance fee, which is preparing and submitting the customs entry. This custom fee must be paid to the customs broker or freight forwarder if brokerage services are included in the cost. The other one involves duties and taxes. These fees are calculated by the customs broker and a percentage of the value of the products and the shipping charges. Duties and taxes are usually paid directly to the customs officers.

Aside from the duties and taxes fees, the nature of the goods a customer is importing will determine the charge that the customs broker will apply. A broker will find the right tariff through a customs code search based on the description of the goods. You must know that tariffs are specific to the country or region and can differ in any country. Gradually, some goods can be imported into a country without paying any import duties. Always confirm with your customs broker if intending products are imported duty-free before you decide to import just any products.
Note that customs inspection fees may apply if the authorities place your cargo to a customs concentrated exam. Unfortunately, you don't get to know before the inspection if your goods will be chosen for such scrutiny.
When to organize customs clearance
To a great extent, customs clearance is mandatory for transporting goods worldwide through air, sea, or land. But there are some exceptions where customs clearance may not be necessary to transport goods and materials between countries in some areas because the borders have been removed.
Smaller cargos can be excused from the need to have a formal customs clearance process. For example, if you are conveying goods to the US and the products are valued below 800 dollars, the cargo can be declared. Section 321 is to be excused from the clearance process and payment of duties but with some restrictions.
Because the import and export clearance processes are country and region-specific, you have to do your research or talk to experts such as a customs broker or freight forwarder to help you with the correct information unique to the countries or regions.
Is the buyer or seller responsible for customs clearance?
In exporting and importing trades, the seller is always responsible for export customs clearance and the supplier for the import clearance. But the precise prior arrangement depends on the agreed Incoterm for the sales transaction. The customs process is completed finalized by a customs broker who is an expert in logistics and makes sure that shipments meet the criteria, laws, and regulations for importing and exporting the products. The customs broker makes the customs entry and helps with other vital administration, duties, and taxes, including payments.
Who is a customs broker?
A customs broker is an agent for importers who helps importers with the transaction of their customs business. They are either independent individuals or organizations licensed by the country's customs and border protection to take charge of custom entries, payment of duties, and how the process can affect releasing goods from custody. Tariff laws authorize these agents.
To find a broker, the easiest way is to allow your freight forwarder to manage the customs clearance, although you will have to pay a customs fee for the service. A freight forwarder has licensed customs brokers around the world to clear their clients' cargo. When you are working with a freight forwarder, you can decide to have a customs broker. A customs broker's role should not be neglected because you will need one at the buyer's terminal for export clearance and the arrival terminal for import clearance. At this point, your freight forwarder won't be liable for additional fees that you may incur if the third-party customs broker causes a delay in the shipment process.
Can I take charge of the customs clearance?
In most countries, no laws or policy suggests you must hire a customs broker to clear imports. But it is recommended you work with licensed customs brokers because they are the only one that is knowledgeable and experienced to finalize the duties of clearing goods via customs. Choose an expert customs broker to avoid delays, mistakes, and incurring extra fees.
How long do customs clear a cargo?
The time involved in the customs clearance process is daunting due to different systems and policies worldwide. Technically, the import customs clearance can start immediately after the goods are in transit and before it arrives at the right destination if the required documents are complete. Many countries provide online systems to submit customs entries, allowing the authorities to clear the goods as fast as possible.
When customs officials have questions, ask for extra documentation, or insist on inspecting the goods, the duration can extend to a few days or weeks. To prevent warehouse charges at the terminal or airport of arrival, the seller and customer must agree to provide the necessary documents.
How can one know the status of the customs clearance procedure?
The buyer's customs broker or freight forwarder should update you with the status of your customs clearance. They will inform you immediately there is a delay, and some customs brokers and freight forwarders have digital services where you can track your shipments to their final destination.