Customs Clearance Procedure

Customs Clearance Procedure

The custom clearance procedure involves a number of steps starting from presenting the shipping bill to port authorities to the receiving of ‘Let Export’ order. You will study different activities under the customs clearance procedure in this section.

Shipment by Sea and Air

Sea and air are the two most widely used modes of export shipping. An exporter decides on the mode of shipment depending on the type of goods, cost of the shipment, delivery schedule, and convenience of shipment. Generally, air carriers are more expensive than sea carriers.

However, in the case of air carriers, a high shipping cost may be offset by lower domestic shipping cost. For example, an exporter can ship products from the local airport instead of a coastal seaport located at a large distance. It should be noted that there may be slight differences in a documentation and customs clearance procedure between shipment by sea and air.

Checking of Shipping Documents

An exporter needs to present the shipping bill at the customs station. The assessing officer present at the station checks the value of the goods and the exportability of the goods under the EXIM policy of the country. In case the assessing officer has doubts regarding the value or description of goods, he/she may ask for the samples of the goods from the dock for physical verification.

Once the assessing officer is satisfied with the inspection, he/she passes the shipping bill to the next authority. Next, the exporter presents the shipping bill to the shed appraiser in docks for examination. The shed officer in turn may mark the document to the customs officer for examining the goods. After the customs officer finds the particulars of the goods to be same as declared, he/she issues the ‘Let Export’ order. Next, the exporter presents the ‘Let Export’ order to the vessel superintendent for supervising the loading of the goods.

Physical Examination of Goods

On receiving the exported goods at docks and presenting the required documents, an exporter needs to get the goods physically verified by the designated authorities. The customs officer needs to verify the quantity of the goods actually received and enter the same into the record-keeping systems. Next, the customs officer marks the Electronic Shipping Bill and passes the original documents to the dock appraiser who in turn assigns an officer for physical examination of goods.

In India, the Central Board of Excise & Customs has given the following examination norms for export goods at port of export in 2002:

The proposals received in this regard have been carefully examined by the Government, and pursuant to this examination, it has been decided to revise the examination norms keeping in view the quantum of incentive, value of export goods, the country of destination etc. As such, the following decisions have been taken:

The scale of physical examination of various categories of exports at the port of export shall be as follows:

A. Factory stuffed export cargo:

Category of ExportsScale of Examination
Export goods stuffed and sealed in the presence of the Customs/ Central Excise officers at the factories of manufacture, ICD/ CFS, notified warehouses and other places where the Commissioner has, by a special order, permitted examination of goods for exports.No examination except: (a) where the seals are found tampered with; or (b) there is specific intelligence in which case, permission of Deputy/Blatant Commissioner would be required before checking.

B. Export under Free Shipping Bills

Category of ExportsScale of Examination
Export under Free Shipping bills i.e. where there is no export incentive.No examination except where there is a specific intelligence.

C. Export under Drawback Scheme

S. No.Category of ExportsScale of Examination
Exports consignments shipped to sensitive places viz. Dubai, Sharhah, Singapore, Hong Kong and ColomboOthers
(i)Consignments where the amount of drawback involved is Rs. 1 lakh or less.25%2%
(ii)Consignments where the amount of drawback involved is more than Rs. 1 lakh.50%10%

D. Export under EPCG/DEEC Schemes

S. No.Category of ExportsScale of Examination
Exports consignments shipped to sensitive places viz. Dubai, Sharhah, Singapore, Hong Kong and ColomboOthers
(i)Consignments where the FOB value is Rs. 5 lakh or less.25%2%
(ii)Consignments where the FOB value is more than Rs. 5 lakh.50%10%

E. Export under Shipping Bills claiming benefits under Reward Schemes

S. No.Category of ExportsScale of Examination
Exports consignments shipped to sensitive places viz. Dubai, Sharhah, Singapore, Hong Kong and ColomboOthers
(i)Exports under Free Shipping Bills where benefits under Chapter 3 of the FTP have been claimed by the Exporter and where the FOB value is Rs. 20 lakhs or less.25%2%
(ii)Exports under Free Shipping Bills where benefits under Chapter 3 of the FTP have been claimed by the Exporter and where the FOB value is more than Rs. 20 lakhs50%10%

2.2 In all cases referred to above, in respect of consignments selected for examination, a minimum of two packages with a maximum of 5% of packages (subject to a maximum of 20 packages from a consignment) shall be opened for examination. The package number to be opened for examination is selected by the EDI system.

2.3 It is to be ensured that exporters do not split up consignments so as to fall within the lower examination norms. Therefore, wherever on the same day the same exporter attempts to export a second consignment (other than under Free Shipping Bills) involving export incentive of ₹1 lakh or less (Drawback/DEPB) or in other cases having the FOB value upto ₹5 lakhs to the same country, the EDI system would alert the Examining Officer.

The Examining Officer can then decide whether to subject the second consignment for examination or not. In case the buyer in both or more consignments happens to be the same person, subsequent consignments should be examined. 2.4 It may also be noted that after the goods have been presented for registration to Customs and determination has been made whether or not to examine the goods, no amendments in the normal course are expected.

However, in case an exporter wishes to change any of the critical parameters resulting in change of value, DBK, DEPB credit, port etc. such consignment should be subjected to examination. 2.5 Notwithstanding anything contained above, any export consignment can be examined by the Customs (even upto 100% examination), if there is any specific intelligence in respect of the said consignment.

Further, to test the compliance by trade, once in three months a higher percentage of consignments (say for example, all the first 50 consignments or a batch of consecutive 100 consignments presented for examination in a particular day) would be taken up for examination. Out of the consignments selected for examination a minimum of two packages with a maximum of 5% of packages (subject to a maximum of 20 packages from a consignment) would be taken up for checking/examination.

The CBEC Customs manual mentions the following in case of ‘Variation between Declaration and Physical Examination’:

“The check list and the declaration along with all original documents submitted with the Shipping Bill are retained by the Appraiser concerned. In case of any variation between the declaration in the Shipping Bill and physical documents/examination report, the Appraiser may mark the Electronic Shipping Bill to the Assistant Commissioner/Deputy Commissioner of Customs (Exports) along with sending the physical documents and instruct the exporter or his agent to meet the Assistant Commissioner/Deputy Commissioner of Customs (Exports) for settlement of dispute. In case the exporter agrees with the views of the Department, the Shipping Bill needs to be processed accordingly. Where, however, the exporter disputes the view of the Department the issue will be finalized in accordance with the principles of natural justice.”

Loading of Goods and Post Loading Certification

After the physical examination of the exported goods, the exporter needs to hand over the duly signed “Let Export” to the steamer agent who in turn will approach the designated officer (Preventive Officer) for allowing shipment. In the case of a container cargo, the loading of the same at the dock is conducted under the preventive supervision of the preventive officer.

Next, the customs preventive superintendent enters the details of packages put inside the containers in the Electronic Data Interchange (EDI) system and mentions the same in the Exporter’s copy of the shipping bill. In the case of any mismatch in the quantity/number of packages put inside the containers, the superintendent needs to put a remark in the shipping bill and the EDI system. Next, the preventive officer supervising the loading of containers provides a Shipped on Board endorsement on the exporter’s copy of the shipping bill.

Export of Samples/Exhibits of Restricted Items

In the case of export of samples/exhibit of restricted items, the following application needs to be submitted to the customs authorities:

1. IEC Number
2. Application Details
i. Name
ii. Address
3. Application Submission Details (in case of electronically submitted applications)
i. ECOM Reference Number
ii. Date of Submission on Server
iii. Submitted to which Regional Authority
iv. File Number
v. Date of Issue
4.Application Fee Details
Amount (₹)
Demand Draft/Bank Receipt/Electronic Fund Transfer No.
Date Issue
Name of the Bank which drawn
Bank Branch on which drawn
5. Total FOB value applied for
i. In Rupees
II. In Foreign Currency
6. Details or items applied for export
S No.DescriptionITC(HS)QuantityFOB Value (Rs.)
7. Details of exports made of made of the item applied for in the preceding 3 licensing years
S No.YearExportsLicence DetailsQuantity ExportedF O B Value of E x p o r t (US $)ExportDestination
NoDateQty.Value (US $)
8. Purpose of Exports (Please tick)
i. Trade
ii. Personal
iii. Sample
9. Foreign Buyer Details
i. Name
ii. Address
10. Shipment Details
i. Port of Loading
ii. Port of Discharge
iii. Country of Export
11. In case of export of samples/exhibits/gifts/, please furnish
i. Ceiling Limit
ii. How much In excess of Celling Limit
iii. Justification for Excess
12. In case of export by post, please furnish details of postal authorities where the parcel will be placed
13. In case of export of seeds, please furnish
i. Details of seed/planting material proposed for export
ii. Whether seed/planting material proposed to be exported is of notified variety : Yes/No
iii. Whether seed/planting material proposed to be exported has been produced under custom production arrangement ? if yes, enclose details / agreement entered into with buyer
iv. Whether variety of Seed/plating material proposed to be exported is used in India : Yes/No
v. Place where the variety proposed to be exported is grown
14.Any other relevant information
Application Form for Export Licence for Restricted Items [please See Guidelines (at the End) Before Filling the Application]

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