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Step-by-Step Process for Custom Clearance

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Financial Analyst

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Introduction

Custom clearance is a mandatory procedure that every import or export shipment must pass through before entering or leaving India. Proper documentation, HS code classification, duty calculation, and coordination with authorities are essential for avoiding delays, penalties, and demurrage. This detailed guide explains the entire custom clearance workflow, helping businesses manage their logistics more efficiently.

Step-by-Step Process

Step 1: Document Preparation

Before customs filing, ensure all documents are correct and complete.
Required documents include:

  • Commercial Invoice
  • Packing List
  • Bill of Lading / Air Waybill
  • Importer-Exporter Code (IEC)
  • GST Registration
  • Insurance Certificate
  • Certificate of Origin (if applicable)
  • Product-specific compliance certificates

Accurate invoices and packing details help avoid assessment disputes and examination delays.

Step 2: HS Code Classification

The HS Code determines duties, restrictions, licensing, and compliance checks.
Key steps:

  • Identify correct HS code
  • Verify rate of duty (BCD, SWS, IGST, Cess)
  • Check compliance requirements (FSSAI, BIS, PQ, CDSCO, WPC, etc.)

Correct HS code classification prevents penalties and re-assessment.

Step 3: Filing the Bill of Entry

Your Customs House Agent (CHA) files the Bill of Entry electronically on ICEGATE.
During this stage:

  • Documentation is submitted
  • Duty is calculated
  • Risk Management System (RMS) decides if shipment needs assessment or inspection

Step 4: Customs Assessment

A customs officer reviews and validates:

  • HS code
  • Valuation
  • Duty calculation
  • Country of origin
  • Licenses and certificates

If discrepancies appear, customs may request additional documents or justification.

Step 5: Examination & Inspection (If Ordered)

Customs may physically examine the shipment to verify:

  • Quantity and weight
  • Declared value
  • Product compliance
  • Packaging

Not all shipments undergo inspection—RMS often clears compliant cargo automatically.

Step 6: Duty Payment

Once the assessment is complete, duties must be paid online.
Components include:

  • Basic Customs Duty (BCD)
  • Social Welfare Surcharge
  • IGST
  • Anti-dumping duty / Safeguard duty (if applicable)

Duty payment is mandatory before the release of goods.

Step 7: Out-of-Charge (OOC) & Cargo Release

After duties are paid and clearance is approved:

  • Customs issues Out-of-Charge order
  • Terminal/CFS releases the cargo
  • Transport is arranged to move goods to the warehouse

This completes the clearance cycle.

Post-Clearance Requirements

  • Maintain all clearance documents for 8 years
  • Claim ITC of IGST (if eligible)
  • Update accounting and inventory
  • Respond to any customs audits or queries

Common Mistakes to Avoid

  • Wrong HS code → higher duty or penalties
  • Incorrect valuation → reassessment
  • Missing compliance certificates
  • Late duty payment causing demurrage
  • Poor documentation quality

Saving Mantra Support

Saving Mantra provides end-to-end custom clearance advisory:

  • HS code classification
  • Documentation support
  • CHA coordination
  • Duty estimation
  • Compliance and licensing support
  • GST & accounting for imports

Disclaimer

This article provides general information related to custom clearance procedures in India. Regulations, duty rates, and documentation requirements may change depending on product type, customs notifications, and government policies. This content should not be treated as legal, tax, or customs advice. For case-specific guidance, please consult DGFT, CBIC, a licensed CHA, or a qualified compliance advisor. Saving Mantra can assist with personalized support based on your business needs.

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