Role of Customs
Custom Department is a government-designated authority that implements policies related to export and import, collects custom duties and facilitates the movement of people, goods and cargo into and out of the country. Any organization that is engaged in Exports and Imports would require the service of a Custom clearance officer. It is important to note that custom clearance involves preparation and submission of documents required to facilitate exports out of the country.
The principal role of Custom Department includes:
- To exercise customs control on the commercial international exchange
- To assess and collect custom duties and taxes
- To fight against smuggling activity and counteracting customs fraud
Customs & Trade Facilitation
Since the custom department is responsible for an accurate, predictable and speedy movement of goods across the border, it facilitates trade. The trading process becomes simplified, standardized (for everyone) and modernized due to the custom department’s credibility. The department in every country aims at developing a consistent, transparent and predictable environment for international trade transactions. More so because it is based on internationally accepted norms and practices, custom departments encourage fair trade practices and help in successful integration into the world economy. An efficient custom department ensures direct benefits both to the Government and to the Business community. These benefits include increased economic efficiency, better security, faster delivery of goods and reduced costs.
Areas of Operations and Authority
Customs Department services operate at all seaports, airports and border gateways, which define the exit and entry points for people and cargo movements into and out of the country. The custom department is empowered by the government to make arrests and confiscate goods.
Customs and Logistics
Every country has its own Foreign Trade Policy, which stresses on the conditions under which goods and services are eligible to be exported or imported. The role of the custom departments is to implement the provision of the policy under customs rules, regulations and tariffs.
All the exports made from domestic country are imports in another country and while many countries may allow free import, in others it may be permitted with due licenses. Many items are also published as banned for import and not allowed entry into the country. All the items that have been exported from the domestic country to the new foreign market will have to be custom cleared in the new market. This is applicable to all trade and business establishments including government and defense agencies. More often than not, necessary duties would have to be paid before the goods are released by Customs.
When a business exports in a massive quantity through any point of entry, the foreign country’s custom department warehouses the cargo at the Customs bonded area until it is released after clearance.
Custom Clearance involves submission of documentations that are required to facilitate export or imports into a country, customs examination, assessment and payment of duty and taking delivery of cargo from customs after clearance along with documents. To complete this process, shipping documents are required, the type of which depends on the type of goods that is being imported and exported. In many cases the documentation may also vary depending on the country of origin or destination. Thus, it is important to be knowledgeable of the documents that need to be prepared, as they may need to comply with the requirements of the import or the export country.
Some of the documents that are involved in Custom Clearance are:
(a) Exports Documentation: Purchase order from Buyer, Sales Invoice, Packing List, Shipping Bill, Bill of Loading, Air Way Bill, Certificate of Origin and any other specific documentation as specified by the buyer or as required by financial institutions or as required by importing country regulations and foreign trade policies
(b) Import Documentation: Purchase Order from the buyer, sales invoice of supplier, Bill of entry, Packing list, Certificate of Origin or any other specification documentation required by the buyer, or the importing country regulation.
To keep it simple, as a standard rule of thumb, a standard importing or exporting transaction necessarily requires a commercial invoice; quarantine packing declaration, packing list, Bill of lading and an insurance certificate. Thus, the custom clearance for commercial cargo involves ‘clearing’ of goods through the custom barriers for importers and exporters (usually businesses) through the preparation of documents, calculation of taxes, duties and goods and service tax.
It is very important for every exporter and importer to be aware of the basics of the import export policies of their targeted foreign market as well as conditions that will be applicable to the product that the business chooses to export.
Clearance Process at Customs
The Clearance Process at Customs is standardized and follows a set pattern.
- On arrival of the cargo at the Custom entry point, the custom carries out physical inspection and the valuation of the import (the export of a business). Valuation of the import consists of ascertaining the correct description of the items, classification of the items under the Customs Chapter and Tariff, and determining if there is any under invoicing and simultaneously certifying the custom duty that needs to be paid.
- After the valuation of the import has been carried out, the clearance agency proceeds to coordinate with the importer to make sure that the necessary custom duty payments are made.
- After the custom duty payments have been made, the clearance agency takes the delivery of the Cargo and delivers it to the importer at the designated place along with the set of original documents.
- In addition, the Custom departments permit a free warehousing period of three to seven days (depending on the country to which the export/import has been carried out to). Generally, sea shipments are given seven days of free warehousing in Customs bonded warehouse while the air shipments are given three days.
- The importer needs to clear the cargo within the free period, failing which a daily surcharge is charged on the consignments for all days up to the time of actual delivery.
Along with performing these roles, the Custom Department is responsible for other series of responsibilities, which include:
- Protection of national industry against trade in goods which could adversely affect the competition in the country
- Protection of natural environment and flora and fauna against entry of hazardous substances and illegal predatory circulation
- Protection of the society against the entry of goods, items or appliances which are hazardous to life, health and safety of citizens
- Protection of the state against the loss of cultural heritage
- Control in the area of state’s customs policy instruments regulating the targets and volumes of international markets
- Enforcement of national and international regulations relating to the prohibitions and restrictions in the international trade, enforcement of agreements, etc.
- Maintaining foreign currency control and combating money laundering
Thus, the custom department has a very important role to play in the export process of any business. The business needs to be thoroughly aware of the custom department’s role and responsibilities along with its own to make the export import process easier.
A Presentation of the Custom Clearence