In this blog, you will learn about
- Documents needed for customs clearance
- Customs clearance requirements for exports and imports in the EU
- Exams and documents required for shipment to clear customs in the US
Export import business is not just a natural progression to a small or medium enterprise with big dreams; it is also a huge undertaking requiring attention to hundreds of tasks, faltering on even one of which could cost you millions.
While in the previous blogs, we talked about how to succeed in export import as a new business, here we will talk in-depth about the requirements for custom clearance of goods.
The customs clearance process involves preparing documents that may be submitted electronically or with consignment. This helps concerned authorities to calculate taxes and duties that will be levied on the cargo.
Clearly, the types of documents needed for customs clearance depend on the type of goods involved, but it also takes into account the country of origin and the destination of consignment. For instance, in order to send frozen vegetables to European markets, exporters need to have sustainability and ethnic certifications. Similarly, for agricultural produce exports to Europe, CE or Conformité Européenne certification is needed to show compliance with EUs health and safety regulatory requirements. However, there are a few standard documents that are inevitably requested by Customs from all businesses. Those are listed below –
Evidently, there is a change in policies and regulations based on the exporting nation or region. In case of European Union, the regulations are implemented, controlled and governed by EU Customs Union. Established in 1968, the role of this governing body is to facilitate trade and protect the financial interests of the European Union and its citizens and their safety and security. Customs authorities implement EU policies in almost every field connected with international trade. They are also in the front line in the fight against fraud, terrorism and organised crime.
Since we’re talking about the customs regulations for goods to be exported to European Union market, it is crucial to have a working knowledge of customs evaluation. Customs Valuation is the determination of the economic value of goods declared for importation. It is imperative to understand the standard set of rules for establishing the correct value of goods to be exported.
Most customs duties and value added tax (VAT) are expressed as a percentage of the value of goods being declared for importation. Thus, it is necessary to dispose of a standard set of rules for establishing the goods’ value, which will then serve for calculating the customs duty.
Following factors need to be considered before correctly assessing the value of the goods-
- economic and commercial policy analysis;
- application of commercial policy measures;
- proper collection of import duties and taxes; and
- import and export statistics.
Customs Clearance Process in the European Union
Moving on, the following illustration highlights the various steps that need to be taken by both exporters and/or importers attempting to ship goods to the EU –
Customs Declaration of goods –
A customs declaration is an official document that lists and gives details of goods that are being imported or exported. It is the responsibility of the exporter to declare goods.
EORI number –
The Economic Operator Registration and Identification (EORI) number is a unique identifier, assigned by a customs authority in an EU country to all economic operators (both companies and individuals) persons engaging in activities covered by EU customs legislation. Importers established outside the EU will be assigned an EORI the first time they lodge:
- a customs declaration
- an entry summary declaration (ENS)
- an exit summary declaration (EXS)
Customs Debt –
It means the obligation on a person to pay the amount of import or export duty which applies to specific goods under the customs legislation in force. A customs debt can therefore only be incurred in cases where the CCT lays down a duty for the goods concerned.
Temporary Storage –
Non-Union goods brought into the customs territory of the Union are in temporary storage from the moment they arrive and are presented to customs (Articles 139 and 144 Union Customs Code – UCC) until they are placed under a customs procedure or re-exported.
Goods’ release for market circulation –
This entails the procedure to fulfil all formalities for the goods to be sold in the EU market. Import requirements include –
- All applicable tariff duties and other charges have been paid.
- Import licences for goods subject to quotas have been presented.
- All applicable authorisations and certificates (e.g. a veterinary certificate for certain animals or animal products) have been presented.
Special Procedures –
Certain goods maybe subject to special procedures and need to go through the following procedures
Union transit which comprises i) External transit and ii) Internal transit which may or may not levy import duties based on the commercial policy measures.
Storage which comprises i) customs warehousing of non-union goods stores in authorised location or premises without levying import duties and ii) free zones wherein goods can be introduced free of any import duties and taxes until they’re assigned an approved customs procedure
Customs Clearance Process in the USA
Customs clearance in the US varies slightly from European Union. The governing body for shipments via sea, CBP or U.S. Customs and Border Protection requires for necessary documents for the smooth shipment and retrieval by the importers
Document notifying arrival of shipment – This document includes information about consignee, shipper, freight location inland transit number and House & Master Bill of Lading.
Bill of Lading- It is a contract between the shipper and the carrier, which provides protection to the shipper from theft and fraud. The document explains exactly what the cargo is and how much is required to be transported.
Packing list – It is a detailed document on the labelled items/goods being exported. Information should include unit count, weight, CBM and any other additional packaging details required/mandated on the basis of types of goods.
Commercial invoice – It is a document that gives a detailed account of goods cost and amount oddities paid to the CBP
A series of examinations are also conducted by US authorities to verify the safety standards of the shipment. These include –
- Food and Drug Administration (FDA) Exam (Food, cosmetics, medical devices etc.)
- United States Department of Agriculture (USDA) Exam
- Intensive Exam (includes detection of narcotics, drugs and weapons)
- Vacis Exam (Vehicle and Cargo Inspection) also known as X-Ray exam
In order to maintain a seamless supply chain, countries leave no stones unturned in ensuring that the export and import of goods happens through a fail-proof customs clearance process. It is therefore, indispensible in its role to vouch for the legality of the freight shipment and in turn, encourage importers and exporters to abide by the rules and regulations to prevent any foul play in the high-risk international trade arena.